With markets pricing in rate hikes aggressively, the 3–5-year segment on yield curve looks attractive on a risk adjusted basis.

"The equity market has been volatile given withdrawal of accommodative monetary policy both globally and locally. The market has already priced in the rate hike hence no there was no major impact on yields post the policy last week. In fact given the shape of the yield curve and swap curve, market is already pricing in a terminal repo rate much higher than the pre pandemic level. With markets pricing in rate hikes aggressively, the 3–5-year segment on yield curve looks attractive on a risk adjusted basis. As liquidity in the system reduces and debt market gets crowded out due to increased government supply, credit spread, which has been very tight should begin to expand. This should offer opportunity to invest in investment grade credit over the next 6-12 months.”

Sahil Kapoor, Senior Executive Vice President, IIFL Wealth

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Financial Express