I have 2 year holding of G-Sec… I get interest in my savings linked bank account. But Now… I am seeing a good amount return in G-Sec prices in my holding page of Kite. Can I book this as Profit and buy new G-Sec as will be made available by the govt! Or should I just hold on to this till maturity!
I have attached a screenshot here … was thinking If I can mint the money showing in the holding … if I can… what might be the pros and cons of it.
Thanks in Advance friends.
Yes bro, you can sell and take the profit showing in Kite. That’s the market price going up because interest rates dropped. You’ll get that gain in your account if you sell now. Just remember, tax may apply. If new G-Secs come with good rates, you can buy those again. Or just chill and hold till maturity if you want steady interest.
Interest rates go down → Bond prices go up
Interest rates go up → Bond prices go down
G-Sec prices fluctuate because they compete with new bonds. If yours is better, price goes up. If not, price goes down.
Yeah, one more thing, always watch for liquidity i.e, spread before taking trades.
Thanks Friend. Much Appreciated. Since I am getting the value increase in my Pledged value… I guess… its better to hold … with Higher Percentage interest earning.
I think New G-Sec will not have this much interest 
If your goal is to optimize returns and you’re okay with a bit of reinvestment work, book the profits now. But if your goal is pure capital safety and hassle-free income, then holding till maturity is completely fine too.
Thanks for responding.
One of the best trades i’ve seen in GSecs . Kudos man @Dinanath_Ghose
As inflation and inflation expectations are is coming down thanks to lower crude and better crop yields, Many institutions like SBI are expecting 50 bps of rate cut in the coming months.
But it is not that simple as well…Considering the uncertainty in global markets due to trump tariffs - US bond yields are not going down and are strong. If anything adverse happens, They may go up and interest rate differential between US and India will not be as low as it is right now.
My suggestion would be to play out both ways. Book part and hold part to play out your exceptional winner trade
Ironically was going through this post where Silver ETFs have gained more volume than Gold ETFs.
yes… I can book a part of it …sure.
Unless you have some tax arbitrage opportunity (capital gains vs coupon payments), the trade doesn’t make any sense. In simple terms, your gsecs have appreciated over the last 2 years to bring down the yield to around the current risk free interest rates. That is, if you opt for fresh gsec issues, the gains from selling your current gsecs will be compensated by the lower coupon payments from the new gsecs till maturity.
The only way to compare gsecs to identify trade opportunities is by comparing yield to maturity for comparable durations.
hmmm … then it seems useless to opt out of the current holdings of G-Sec.
