Fixed income attractive again

After demonetisation, the economy at the margin has slowed down

The recently held Reserve Bank of India (RBI)’s monetary policy delivered a sharp surprise to the fixed income market, not only by maintaining a status quo on rates (while the market expected at least a 25 basis points cut from 6.25 per cent), but also by changing its two-year stance of being ‘accommodative’ to ‘neutral’, potentially implying the end of the current easing cycle.
 
The market reaction to the same was sharp, as it had considered rate cut a given, especially after demonetisation. However, the initial indication of the current RBI stance was visible when the central bank chose