From a broader perspective, Jangam expects inflation to remain benign into 2026, keeping monetary conditions supportive. Economic growth, however, is likely to moderate gradually after peaking in the second quarter of fiscal 2026, partly due to global trade uncertainties and questions around the sustainability of the GST-led consumption boost.
Globally, major central banks, including the US Federal Reserve, are expected to remain largely accommodative. This helps ease pressure on the rupee and supports Indian bond markets.
Domestically, the government securities yield curve has steepened sharply since March 2025. The yield gap between long-term bonds such as 15-year, 30-year and longer maturities and the 10-year benchmark has widened significantly, making longer-duration bonds relatively more attractive.
Additional support for duration-oriented debt funds comes from structural factors such as the possibility of India’s inclusion in global bond indices, expectations of one more rate cut in the current cycle, ample liquidity, and manageable government bond supply.