Opportunities presented by the debt market nearly four quarters ago are not there any more. That was expected and therefore the prudent players have started devising suitable strategies already. It's now time to take stock of the situation and face the next round of uncertainties with a renewed spirit.
The
past few years have seen a sea change in the debt
markets in India. During the early 90s, significant
beginnings were made to develop the hitherto
non-existent debt market. The progressive deregulation
of interest rates, introduction of primary dealer
system, removal of some of the artificial segmentations,
opening of the economy, paving way for strong external
inflowsall helped in the process of development of the
markets.
Another
factor that greatly assisted this process was the
control of inflation to low single digit levels, be it
through better supply management or monetary management.
The
accompanying graph on Indian 10-year G-sec shows that we
have had a drop of about 600 bps in three years with
corrections of 60-70 bps on couple of occasions. Notable
perhaps are the reasons for such corrections, viz.,
geo-political tensions and event risks, which in a way
have only worsened the world economic scenario, thus
reinforcing the case for softer rates. Thus the overall
trend remained intact.
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