The big difference between debt and equity market is that the former is less volatile. However, in the last one month, Bond markets have been volatile in response to various announcements including the low government borrowing plan, high crude oil prices, lower than expected FPI (Foreign Portfolio Investment) limit and lower inflation forecast announced by the RBI in its latest Monetary Policy meeting. To name of few above all, the RBI has allowed banks to spread provisioning for mark-to-market (MTM) losses incurred during December 2017 and March 2018 equally over up to four quarters.

This news, collectively, has had an impact on the bond markets and pushed Bond Yields up and down significantly.