RBI's OMO bond sales program to negatively impact NBFCs

Lakshmi Iyer, the CEO of Investment & Strategy at Kotak Alternate Asset Managers, now anticipates yields to first consolidate and then rise again. She also advises caution in the equity markets, as the cost of borrowing is likely to remain at elevated levels.

"Bond yields rising from 7.11% to 7.35%, is a massive bump up, I think now the yields will have to consolidate probably come down 5-10 basis points and go up that is how it's going to be. If you try to tie this into the larger markets, from an equity market standpoint, till the time the bond yields or sovereign bond yields stabilise, it's very difficult to see the corporate bond yields come down. And that clearly means that the cost of borrowing is going to remain at elevated levels. One will have to take that into consideration when you are deploying money into the equity markets as well. I don't think markets have still fathom that so I think there needs to be some bit of caution, even on the equity markets," Iyer said.