Buying shorter debt is now a hot trade in India's bond market

Short-term debt funds in India are attracting big inflows amid uncertainties over the central bank’s future policy stance.
 

Funds maturing in up to six months, including liquid and ultra-short duration funds, got the highest inflows in three months in July, swelling the total debt inflows to Rs 73,700 crore ($10 billion), according to the Association of Mutual Funds in India.

Rising inflation is constraining the central bank from easing further even as the economy remains vulnerable following a deadly wave of coronavirus infections. The Reserve Bank of India last week left its key rate unchanged but one policy member dissented