How India's cyclical economy is set to boost bond markets

Indian bond markets continued their post-budget rally as the promise to stick to the fiscal roadmap, as well as the RBI's policy on inflation, has seen a complete turnaround in market sentiment.

This looks set to continue with a number of favourable local factors for a bullish bond outlook such as the fact the fiscal deficit for full year 2017 is in line with expectations; stable headline inflation; the expectation of a normal monsoon; and RBI support in terms of 'Open Market Operations' to bond markets. In the first bi-monthly policy of the 2016-17 year, the RBI cut the key policy rate by 25bps and announced a revised liquidity framework for monetary policy operations in the form of a slew of liquidity easing measures. In this meeting, the RBI reiterated the "monetary policy st...