Bond traders gained the most in Raghuram Rajan's tenure

Even though bankers and bond traders have always been critical of RBI governor Raghuram Rajan in his tenure, apparently because of his anti-inflation policies, the truth is that they have actually gained the most because of his decisions.

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There were 41% returns from sovereign bonds (rupee sovereign debt) during the past three years that Rajan has been in the chair, and this figure is more than double of what they had earned in the previous three years, says a Bloomberg report on compiled indexes.

"The outperformance over the past few years can be attributed to a significantly improved macro-economic outlook on the back of a new government," Vijay Santhanam, MD and head of risk solutions group at Barclays India, told ET.

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"A normal monsoon and RBI's focus on systemic liquidity through open market operations should continue to support buying interest in the bond markets in the near term," he added.

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It was on Wednesday that the benchmark yield dipped to 7.10%, the lowest in nearly seven years, which pushed prices up since RBI’s liquidity stance has comforted investors.

Such open market bond purchases will further be initiated by RBI so that the system doesn’t turn into deficit mode.

"Rajan's tenor could be highlighted for developing distinctive approach to policy stance and policy strategy, development of liquidity framework through autonomous and discretionary liquidity drivers and better visibility of interest rate regime," said Soumyajit Niyogi, Associate Director, Credit & Market Research Group, India Ratings.

When Rajan took over in 2013, the benchmark yield was as high as 9%, and in past three years, it has gained about 200 basis points, which comes out to be Rs 13 in absolute terms.

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