11 Debt Funds Lost Over 1% In A Single Day

11 Debt Funds Lost Over 1% In A Single Day

11 Debt Funds Lost Over 1% In A Single Day

The Indian stock market has been delighted with the finance minister’s announcement. The government has announced corporate tax cuts for domestic and new manufacturing companies. As of the result, Most equity mutual funds moved out of the negative zone on prominent improved sentiment in the stock market. Meanwhile, 11 Debt Funds lost their Net Asset Values. Once you check what happened in the debt or money market after the FM’s announcement.

According to the reports, the money market greeted the government’s largesse with trepidation. The FM has announced a series of measures along with corporate tax cut, to boost the fortune of the sagging economy, forego a large amount of revenue. After the government announcement, the money market investors were eagerly waiting to know how the government will attach the gap- whether it will borrow heavily and shows the high yields. 

On the next day of the finance minister’s announcement, the 10-year benchmark bond yield jumped from 6.64 percent to 6.79 percent. Even debt mutual funds also losses NAVs. The government move on corporate tax cuts affects more on the investors who invest in long term bond funds and gilt funds. NAVs of 11 debt mutual fund schemes fell by more than one percent on September 20.

According to the reports, Long duration and gilt funds lost most in its net asset values. Moreover, a few dynamic bond schemes with a long average maturity also lost the value. As of the source, Reliance Nivesh Lakshya Fund, long-term holds the highest fall of -1.78 percent in its asset value.

11 Debt Funds with a Long-term and Gilt Funds

Here are some Long-term and Gilt funds in which 11 Debt Funds Lost over 1 percent in a day.

 Schemes  % Change in NAV (19th September to 20th September)
 Reliance Nivesh Lakshya Fund  -1.79
 Kotak Gilt-Invest  -1.30
 Invesco India Gilt Fund  -1.11
 ICICI Pru Long Term Bond Fund  -1.11
 IDFC G-Sec-Invest  -1.10
 PGIM India Gilt Fund  -1.09
 Tata Gilt Securities Fund  -1.07
 PGIM India Dynamic Bond Fund  -1.07
 Quantum Dynamic Bond Fund  -1.04
 IDFC Bond Fund – Income Plan  -1.04
 L&T Gilt Fund  -1.03

A source stated that the government may receive lower revenue due to the tax rate cut. This will lead to a rise in the fiscal deficit. As of the result, government borrowing will go up. This lead to a spike in the bond yields on Friday which in turn moved the bond price down. 

The Bond yields and prices move in the opposite direction. Moreover, when the bond yields go up, the bond price and net asset values go down.

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