IRFs can be an interesting option
If you have a view on interest rates, that is, if you feel these are either headed up or down, you have the option of participating in the fixed income market by investing less than Rs 10,000. Thanks to the new interest rate futures (IRFs) launched by MCX-SX on Monday, and the National Stock Exchange on Tuesday, it is possible for retail investors to benefit from their view on these.
IRFs are similar to equity futures. Here the future contracts of 'buy' or 'sell' are of underlying government bonds, similar to future contracts of stocks. The minimum contract value is pegged at Rs 2 lakh and initial margin which you have to pay upfront is around three per cent. This works out to Rs 6,000. If you have a view that interest rates on G-Secs are likely to come down, say from current levels of 8.5 on 10-year G-Sec to eight per cent, the options to invest and make returns are an income fund, tax-free bonds, non-convertible debentures (N