INCOME FUNDS OR SHORT TERM FUNDS
As recommended by us on Monday ( 10 year was at 5.22%), kindly redeem your investments in G Sec funds & book profits by switching to either Income Funds or Short Term funds:
- After the REPO rate cut, maximum compression has happened in the long dated G Secs. Going forward there is a possibility of only 10 to 15 bps compression in the long dated G secs from current levels of 5.27%.
- Corporate bonds are still quoting 60-80 bps higher than the same tenor G secs. Hence, there is a further scope of compression in Corporate Bonds which form major portion in either Income or short term funds.
- Liquidity overhang still continues & we are still bullish on the Income & STP schemes. Liquidity will drag the 10 year down to 5.05% to 5.10% by end October’03.
- On Risk Adjusted Return basis Short Term Plans look very attractive.
- G Sec will be range bound between 5.20% to 5.25%.
- We recommend you to look at STP of Deutsche MF & ING Vysya MF.
- In the month of September’2003 there will be half yearly profit booking by Corporates, there will be an outflow on account of advance tax & building up of cash position for likely outflow on account of RIB outflow in the first week of October’2003. 10 year G Sec has inched up to 5.28% today ( i.e. on September 01’2003 ).
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