Expected downward shift in yield curve warrants higher allocation towards bonds: Motilal Oswal Private Wealth

economictimes.indiatimes.com:

The inclusion of India into the JPMorgan Global bond index and expectations of rate cuts from the first half of FY25 is set to put a cap on bond yields in the domestic market over the medium term.

A downward shift in India’s yield curve will thereby make the bond market attractive, and pave the way for increased allocation towards debt in the portfolio, believes Jayesh Faria, director — regional head — west at Motilal Oswal Private Wealth.
“We are requesting our clients to participate 65-70% of their debt portfolio in high quality roll down strategies with 7-12 years average maturity. The remaining 35-40% through high yields NCD or private credit or REITs & InVITs,” Faria said in an interview with ETMarkets. Edited excerpts:

The equity market has lost some momentum, but would you still say that India is in a stage of a strong bull market phase?
We feel that India is in a structural bull market due to improvement in earnings of our companies. For three consecutive years now, Nifty 50 earnings have grown by double digits. For FY24, estimates for Nifty earnings are of 22% growth. Therefore, we feel earnings growth is expected to remain steady over the next few years.

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