India short-bond rally faces risks from cash drain, analysts Say (opens original article in a new tab)

Analysts warn that India's short-end bond rally may decline as the Reserve Bank of India plans to drain excess liquidity through cash withdrawal operations and potential deposit reserve increases, despite recent foreign capital inflows.

• BofA Securities and Bandhan AMC Ltd. expect RBI to increase short-term cash withdrawal operations as banking liquidity rises to 8 trillion rupees
• DBS Bank expects RBI to require higher deposit reserves in August
• Short-end bond rally faces risks due to potential liquidity drainage and rate hikes