Lok Sabha Election 2024: Will interest rates and fixed income market see impact? Expert say this...
As the 2024 Lok Sabha Election is underway and Prime Minister Narendra Modi seeks a third term, investors are preparing for more market ups and downs. Will India’s election impact future interest rates and the fixed-income market? In an episode of Market Talks focusing on Secrets of Fixed Income Investing, Dhawal Dalal, Chief Investment Officer of Fixed Income at Edelweiss MF, sheds light on the fixed income market, also called the bond market.
Dhawal Dalal stated, «The fixed income market, often termed the bond market, surpasses the equity market in size threefold. It comprises diverse sectors such as post office investments, insurance products, and fixed deposits, all categorised as fixed income instruments.»
24/7 Operation: Unlike equity markets, which operate Monday to Friday, the bond market functions around the clock, facilitating continuous trading.
Reduced Volatility: In comparison to equity markets, the bond market tends to exhibit lower levels of volatility, offering investors a more stable investment environment
Regarding the impact of general elections on the bond market, he emphasized that it is more influenced by the government's fiscal policy than by polls themselves. Before the election, there was anticipation that the government would announce populist measures. However, the government exhibited resilience by avoiding such actions to gain electoral favour.
He further noted the current government's dedication to fiscal responsibility. “This commitment to prudent fiscal policies will likely continue if the current government wins the election. However, a new government taking office could introduce some volatility as new policies are devised and implemented," stated Dalal.
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