Business Standard

Signals from the debt market: Staying invested in equities is important

A steep yield curve has been followed by a bull run in equities on a couple of occasions in the past

10-year bond yields rise, may become tough for banks to pass on rate cuts

While it is good to take precautions, we should not forget the lessons of history. Bull markets are born in the depths of pessimism

Ashutosh Wakhare
While yields on short-term Indian government bonds are falling like there is no tomorrow, those on longer-term bonds remain sticky. This has led to a steep yield curve – the sort that the country has not witnessed at least in the past two decades. A steep yield curve has implications for investors. The country has witnessed steep yield curves twice in the past, and each such occasion was followed by a stunning bull run in equities. To quote a popular saying, history does not repeat itself but it does tend to rhyme.
The first instance: Between 2003 and 2005, yields

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First Published: Jun 13 2020 | 10:01 PM IST

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