“A repo rate hike typically creates near-term mark-to-market pressure on debt funds, particularly medium and long-duration schemes, as yields rise and bond prices fall. However, markets often anticipate policy actions, meaning the NAV impact may already be priced in before the decision. We believe markets are pricing in more than what RBI probably may end up doing in terms of rate hikes, as can be seen by the market reaction in terms of lower long-term yields, future NAV performance will depend on RBI actions, inflation, crude oil, global yields and domestic liquidity conditions,” Bisen said.
