The 10Y Benchmark closed at 6.18% on March 31st finally rallying to 6.02% on the close
of April. The yields fell as the RBI’s Monetary Policy Committee though broadly retained its
inflation and growth projections, pledged liquidity to support growth and also announced
the much touted G-Sec Acquisition Programme (GSAP) wherein it commited to purchase
Rs. 1 Trillion in Q1 2021-22 in secondary markets over and above the OMO/ Operation
Twists expected around Rs. 3 Trillion.
The resurgent wave which has clamped down the nation’s economic activity and poses a
risk to various growth projections will compel the central bank to continue with a softened
approach for much longer than expected to in a bid to support the economy. Hence, the
yields are expected to trade in the range of 5.95 – 6.10 for the month of May 2021.