By:-Vineet Agrawal, Co-founder, Jiraaf
“India’s bond market is likely to enter 2026 on a firmer structural footing, even as near-term volatility persists. After an extended phase of tight monetary conditions, the focus is gradually shifting from inflation control to sustaining growth and maintaining fiscal discipline. While inflation is expected to remain broadly within the RBI’s comfort zone, the central bank is unlikely to rush into aggressive rate cuts, preferring a calibrated approach aligned with global monetary trends and domestic liquidity conditions.
Government borrowing remains elevated, but improving tax buoyancy and a clearer glide path on fiscal consolidation should help anchor long-term yields. Meanwhile, corporate bond issuance is expected to pick up, driven by refinancing needs and a gradual revival in private capital expenditure, adding depth and breadth to the credit market.
For investors, 2026 could shape up as a year of stable income and measured returns, with portfolios benefiting more from resilience than short-term volatility. With yields still attractive and credit fundamentals improving, bonds are increasingly re-emerging as a strategic allocation rather than a tactical trade.”