“The market feels the Reserve Bank of India (RBI) has spoken, but action hasn’t followed,” said Murthy Nagarajan, head fixed income, Tata Mutual Fund, pointing to the disconnect between policy signalling and market behaviour as the reason for waning investor confidence in the Indian bond market since the June MPC policy . Since then, the 10-year government securities (G-Sec) have moved higher, hovering around 6.50% levels from a low of 6.10-6.15%.

He feels that while the RBI executed a 50 basis point (bps) rate cut in June, its simultaneous shift from an accommodative to a neutral stance nullified the easing. This shift sowed confusion among market participants, leading many to believe that further rate cuts were off the table, despite falling consumer price index (CPI) inflation and

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