India: Tactical duration opportunity on rates – DBS

DBS Group Research economist Sherilyn Chew notes that renewed geopolitical risk has lifted yields across Asia, but sees Indian G-Secs as offering a tactical opportunity. She argues the India sell-off is mainly macro repricing, with domestic fundamentals and structural demand intact. Foreign participation remains supportive, and DBS views the 10-year sector as attractive for adding duration once risk sentiment stabilises.

Indian G-Secs repricing seen as transient

"Renewed geopolitical risk has pushed yields higher across the region, but we would differentiate between markets where the repricing presents a more compelling entry and those where it reinforces existing concerns."

"For India, the sell-off looks largely driven by a broad-based macro repricing rather than any deterioration in domestic fundamentals."

"With supportive structural demand and ongoing foreign participation still supportive, the spike is likely transient and should fade once risk sentiment stabilises."

"As such, we view this repricing episode as a tactical opportunity to add duration exposure in the 10-year sector, at more attractive entry levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)