Debt funds post positive returns in November


Bangalore: Decline in securities supply and surplus liquidity boosted investor sentiments in November and help government bond prices to gain marginally, reports Mint. It also helped debt funds to post positive returns. The yield on the 10-year benchmark 6.9 percent government bond maturing in 2019 declined to 7.26 percent in November, from 7.3 percent in October. However, higher inflationary pressures, particularly higher food prices, kept bond prices in control. The inflation rate of food articles in the country rose to 17.47 percent in the week ended 21 November, from 15.58 percent in the previous week. Primary articles inflation in the week ended 21 November rose to 12.53 percent, from 11.04 percent a week earlier. The stronger-than-expected macroeconomic data also led to fears of end of a loose monetary policy. During the month, data from the Central Statistical Organization showed industrial growth increased by 9.1 percent in September, compared with six percent a year ago. The market had expected the Index of Industrial Production to fall to seven percent, from a 22-month high of 11 percent in August. Bond prices were also hit badly after gross domestic product data showed the economy grew 7.9 percent in the July-September quarter, from 6.1 percent in the previous quarter. The market had expected 6.3 percent growth in July-September quarter.