Look at medium-term debt funds

Short-term tactical considerations also suggest long trades in the financial sector

The last week has seen a bewildering quantum of news flow. It all adds up to a good chance of a large increase in liquidity as the general elections draw nearer.  The five Assembly elections indicated a clear pattern of rural distress. Rural voters are unhappy with the BJP. Farm loan waivers, plus higher minimum support price, plus power subsidies, etc., will all be on the agenda for all parties in their campaigns. 

A falling trend of retail inflation creates an economic rationale for cutting rates. A headline inflation rate of less than 3 is definitely a signal for a rate