Indian Mutual Funds Continue Tilt to Short-Term Instruments

Indian mutual funds are increasingly purchasing the shortest maturity instruments as investors channel savings into sub one year schemes, steering clear of longer duration debt amid expectations that the RBI is nearing the end of its rate cut cycle. Fund managers are focusing on preserving liquidity and reducing duration risk, as supply demand dynamics for long dated bonds weaken. This shift reinforces demand for short end fixed income amid a cautious rate outlook.