UTI Asset Looks Beyond Rupee Slump as India's Poll Season Near

Political uncertainty and concerns about the impact of surging oil prices on the fiscal deficit have prompted UTI Asset to trim the duration of its bond holdings

Rising crude oil prices and a tumbling currency have already battered India’s $725 billion government bond market. The next focus of risk for the nation’s oldest mutual-fund company now are the upcoming elections.

Revenue from the goods and services tax has undershot the target for five straight months, and UTI Asset Management Company fears the government may have little scope to cut expenditure before the three key state polls later this year and general elections in 2019.

“Political uncertainty will play out in the coming months that will have the most bearing on government bonds,” Sudhir Agrawal, a fund manager