The Indian Fixed Income market is passing through a very tough time with the YoY WPI at stubbornly sticking at around 12% mark and is expected to remain in double digits for some more time to come. The central bank in order to keep inflation under control ensured tight liquidity in the banking system, which lead banks to borrow as high as Rs. 90000 crores under RBI LAF. There has been a sharp decline in 10 yr g sec on back of SLR demand and flight to safety 10yr G sec has come down to 8.05% from a high of 9.50% and is expected to trade in the band of 8.25% on the upside and 7.75% on the low side, a breach of level on either side will be very significant. With liquidity remaining tight and the RBI was on a rate-hiking mode, the 10-year AAA credit spreads have widened to around 300 Bps from 150 Bps and 450 Bps from 150 Bps in the 1 Yr segment.  We do not expect any significant widening in the credit spreads on the AAA credit curve in case it happens it will be taken as an opportunity by the market and will be short lived however we expect the credit spreads to shrink in Q4 as the RBI will probably change the stance early next year as we expect a sharp decline in WPI on the back of falling commodity and crude oil prices, therefore investors can come in bonds funds with a investment horizon of minimum 6 moths.