India’s benchmark 10-year government bond yield is expected to soften to the range of 6.15–6.20% within the next three months, driven by a dovish Reserve Bank of India (RBI), easing fiscal concerns, and potential trade tailwinds, according to Sandeep Yadav, Head of Fixed Income at DSP Mutual Fund. In an interview with Financial Express, Yadav highlighted that the current macroeconomic setup favors a decline in yields, making gilt funds an attractive short-term investment option for risk-tolerant investors.
Yadav’s forecast comes at a time when the 10-year yield has already dipped below 6.5% for the first time in over three years, signaling a shift in market sentiment. He believes that inflation is no longer the primary driver of rate decisions and that the RBI’s policy trajectory will be increasingly influenced by growth dynamics and external stability.
🧠 Key Highlights from Sandeep Yadav’s Fixed Income Outlook
| Element | Details |
|---|---|
| Expert | Sandeep Yadav, Head – Fixed Income, DSP Mutual Fund |
| Yield Forecast | 6.15–6.20% within three months |
| Current Benchmark Yield | ~6.48% (as of October 24, 2025) |
| Investment Strategy | Gilt funds for 3–6 month horizon |
| Policy View | RBI dovish, growth-driven stance |
| Inflation Outlook | “Non-event” for rate cuts |
| External Factors | Trade deal with US, stable rupee |
Yadav’s view aligns with broader market expectations of a rate cut in early 2026, contingent on global and domestic cues.
📊 Timeline of Yield Movement and Policy Signals
| Date | Event Description |
|---|---|
| August 2025 | RBI maintains repo rate at 6.5% |
| September 2025 | Two MPC members vote for stance change |
| October 2025 | Yield drops below 6.5% amid liquidity easing |
| October 24 | Yadav projects 6.15–6.20% yield by January 2026 |
The RBI’s evolving stance and fiscal discipline have created a conducive environment for yield compression.
🗣️ Reactions from Market Participants and Analysts
- Bond Trader: “Yadav’s call is bold but plausible. The curve is flattening, and demand is strong.”
- Economist: “Growth is the new anchor. Inflation is well-behaved, and fiscal signals are positive.”
- Investor on X: “Moved to gilt funds last week. Hoping for that rate cut!”
| Stakeholder Group | Reaction Summary |
|---|---|
| Fund Managers | Aligning portfolios with lower yield expectations |
| Retail Investors | Exploring short-duration debt funds |
| Analysts | Watching RBI’s December policy closely |
| Media | Amplifying dovish signals and bond rally |
The sentiment is broadly supportive of Yadav’s thesis, with gilt funds gaining traction.
🧾 Comparative Snapshot: Yield Forecasts and Investment Strategies
| Expert/Institution | Yield Forecast (3M) | Recommended Strategy | Policy View |
|---|---|---|---|
| DSP Mutual Fund (Yadav) | 6.15–6.20% | Gilt funds, short-term debt | Dovish, growth-led |
| LGT Wealth (Doshi) | 6.20% | Duration play in sovereigns | Rate cut in December |
| Kotak AMC | 6.25–6.30% | Laddered portfolios | Wait-and-watch |
| SBI MF | 6.30% | Dynamic bond funds | Neutral stance |
Yadav’s forecast is among the most aggressive, reflecting confidence in macro stability and policy support.
🧭 What to Watch in India’s Fixed Income Market Ahead
- RBI’s December Policy: Key signals on rate stance and liquidity management
- US Fed Moves: Global rate cycle and dollar strength to influence rupee and flows
- Fiscal Discipline: Government borrowing and deficit targets to impact yield curve
- Investor Behavior: Shift toward sovereign and AAA-rated instruments
The next three months could define the trajectory for India’s debt markets heading into FY26.
Disclaimer
This news content is based on verified financial commentary, market data, and expert interviews as of October 24, 2025. It is intended for editorial use and public awareness. The information does not constitute investment advice, portfolio recommendation, or financial guarantee and adheres to ethical journalism standards.
