RBI reduced rate by 50 basis point couple of days ago. I learned when RBI reduce interest rate - NAV of Gilt funds should go up …but as of today June 9 25 - I checked
- Tata Gilt Securities Fund
- Nippon India Nifty G-Sec June 2036 Maturity Index Fund
- HDFC Nifty G-Sec Jun 2036 Index Fund
- Kotak Nifty G-Sec July 2033 Index Fund
- Bandhan G - Sec Fund - Constant Maturity Plan
- Baroda BNP Paribas Gilt Fund - Plan B
- Edelweiss CRISIL IBX 50 50 Gilt Plus SDL Sep 2028 Index Fund
All above funds NAV is reduced by about 0.25-0.50% in a day.
Can someone explain ?
@Akash_Shah @Meher_Smaran @viswaram @nithin_kumrr
As the RBI changed its stance to neutral, higher tenure bonds may be factoring in that we are nearing the end of this rate cut cycle. Hence, the yields spiked in 10-year bonds, leading to a fall in bond prices and Gilt funds consequently.
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I market there is a saying, price action happens first news follows 
Look at 10 year gsec yield chart for last 30 days, as you can see from middle of May yield had already started falling (so those fund NAVs would have already gone up) as rate cut was expected.
What spooked market, as rightly pointed out in previous post, is that RBI changed stance to Neutral, so probably no more rate cut expected this year. And hence rate actually rose a bit after the news. And hence on the day you checked, NAV fell.
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So those gilt funds continue to fall ? @Akash_Shah
any idea when the fall will stop?
