Invest in long term gilt funds after poor GDP numbers

MUMBAI: Poor Gross domestic product (GDP) numbers make a case for long term bond funds and dynamic bond funds. GDP growth of the Indian economy for quarter ended March 31 stood at 4.8% and for the financial year FY2012-2013 the number stood at 5%. This rate of growth is the lowest in the decade.

Yearly growth number though has come in sync with the market expectations they are well below government expectation of 6.5%. Slowing down of economy makes a case for cut in interest rates.

Investors may benefit from lower rates if they invest in long term bonds. "Recent upward movement in bond yields offers a good entry opportunity for investors. Investors can look at investing in long term gilt funds and dynamic bond funds," says Deepak Panjwani, head-debt markets, GEPL Capital.

"We do believe that growth is bottoming out but the recovery is likely to be gradual with a lagged pick-up in consumption and investment and we expect real GDP growth at about 5.8% in FY2014," says Bhupali Gursale, economist, Angel broking.

Market participants say that the GDP numbers along with inflation numbers and IIP numbers will offer a base for Reserve Bank of India to take a call on interest rates in its monetary policy review scheduled on June 17.