Longer-tenor government securities are currently seen as appealing investments as much of the uncertainty has already been factored in, making the risk-reward balance in Indian markets more favorable. According to a report by Bajaj Finserv AMC, factors such as domestic growth momentum, supportive policy changes, and enhanced global exposure through trade agreements have contributed to this improved risk-reward balance. The asset management firm, while favoring long tenor G-secs, noted that yields might remain range-bound in the short term due to significant supply.
Recent advancements in trade deals have been highlighted, with the report emphasizing that India’s structural cost advantage in manufacturing is expected to mitigate the impact of opening sectors to US imports. This impact is projected to be limited to specific areas such as premium cars and high-end alcohol, rather than affecting the broader industrial ecosystem. Sorbh Gupta, Head-Equity at Bajaj Finserv AMC, mentioned that recent trade agreements, the Union Budget, and RBI policies collectively indicate India’s positioning for a robust domestic growth phase driven by manufacturing and investment.
The report also noted the Reserve Bank of India’s (RBI) guidance on inflation, with an upward revision in the FY26 estimate to 2.1% from 2%, and heightened expectations for the first half of FY27. This adjustment aligns with an economy transitioning from a period of low inflation to a phase of cyclical growth recovery. Siddharth Chaudhary, Head-Fixed Income at Bajaj Finserv AMC, highlighted the positive economic outlook, with Indian equity markets starting 2026 on a volatile note but showing improved sentiment following recent developments, especially the India-US trade announcements.
As consumption patterns strengthen and capacity utilization rates increase, a rise in investments heading into FY27 is anticipated, with notable growth performance already observed in sectors like manufacturing, financial services, real estate, professional services, and hospitality.
