July witnessed consolidation in the debt market following June’s repricing, with yields largely range-bound across the curve. Crude oil prices remained volatile but ended higher on supply concerns and geopolitical developments. Liquidity in the banking system stayed in surplus, though the RBI actively managed it through frequent VRRR operations. Meanwhile, the rupee weakened sharply amid renewed trade tensions and heavy FPI outflows, underperforming most regional peers despite a mid-month softening in the dollar index.
Money Market and Low Duration Funds continued to lead the sub-1-year space in July, delivering healthy 3-month annualised returns of 7.36%, supported by elevated short-term rates and stable accrual. Corporate Bond and Credit Risk Funds stood out in the short- to medium-term horizon, benefiting from spread compression and strong demand for high-quality credit.
The Indian rupee depreciated sharply, ending July near record lows due to renewed trade tensions, persistent FPI outflows, and a strengthening dollar. Despite RBI intervention, the rupee underperformed regional peers and remains on a cautious footing.
The attached snapshot captures all these key developments, along with category-wise mutual fund performance trends.
Click below to read the full snapshot attached.