Bonds rally may have run Its course as RBI to adopt shallow rate-cut cycle

The sustainability of gains is in doubt amid concern that the government may bust its fiscal-deficit target by boosting spending before this year's national election

The rally that saw Indian sovereign bonds post their best quarterly gain in four years may have it limits as the central bank is unlikely to embark on a series of interest-rate cuts, according to the nation’s oldest mutual-fund company.

Cheaper oil and a new central bank governor widely seen to have a dovish bent helped local bonds and the rupee rebound from a selloff toward the year-end. The sustainability of those gains is in doubt amid concern that the government may bust its fiscal-deficit target by boosting spending before this year’s national election.

“Markets as usual always price-in moves ahead of