Santa Claus rally in India bonds to ride on after RBI's liquidity injection gift
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The Reserve Bank of India (RBI) will inject up to 2.90 trillion rupees through bond buying and forex swaps, boosting government bond prices and ensuring optimal banking liquidity. This move aims to keep bond yields low, aiding banks and facilitating policy rate cuts to stimulate credit demand and reduce government borrowing costs. The 10-year bond yield is expected to test 6.48% and potentially move to 6.30% in the medium term. The RBI's aggressive liquidity infusion is seen as a commitment to maintaining easy liquidity conditions.
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