The 10-year G-sec curve was on an upward trajectory during the month of April, with the yield moving from ~ 7.99% in the beginning of the month to 8.12% towards the end of the month.
This was on the back of the high inflation number that is ~ 8.98% for March 2011 and the rising oil prices. The high inflation number also the led to speculations among the market players about the rate hikes that RBI might impose in the Annual Policy Statement that was to be announced on 3 May 2011.
On the back of this, we advise investors to allocate their portfolio towards short term papers like FMPS, Ultra short Term Funds and Short Term Funds. Investors should stay away from long-term papers for some more time.
In this scenario, we advise:
Investors with a time horizon from 3 months to 24 months can lock-in their money in FMPs (available with varying maturities) at the prevailing high rates
The Research Team is part of iFAST Financial India Pvt Ltd
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