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The MPC decided to remain focused on the 'withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth. The RBI has been holding rates since February
The influx of foreign money after a three-year hiatus has kept local sovereign bond yields - and therefore corporate borrowing costs - anchored amid a volatile inflation environment and a tight liquidity stance by the Reserve Bank of India (RBI).
If foreign flows come in, then the pressure on the rupee will get abated. But at that point, a lot will depend on how much the RBI intervenes and open market operations remain a worry, says the money manager
"As December is generally a sluggish month, market yields may not move much either side. We expect 10Y G-Sec yield to trade in a range of 7.15%-7.25% with a downward bias," says Avnish Jain, Head- Fixed Income, Canara Robeco Mutual Fund.
Fintech companies, facing a potential funding crunch due to the anticipated decline in bank support, may be forced to seek capital through the public markets or go into consolidation mode, particularly those with a higher concentration of unsecured loans.