Diwali falls on Sunday, 8 November 2026, and for many Indian households, it marks the start of a new financial year in spirit if not in law. It is a convenient date to sit down with your statements. It is not a market signal, and the Muhurat trading session that evening is an equity ritual with no bearing on your bond holdings. What does matter is that the interest rate backdrop is different from the one you faced last Diwali.
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What has changed in fixed income since last Diwali
On 7 October 2026 the RBI raised the repo rate by 25 basis points to 5.50% and moved to a calibrated tightening stance, its first hike since February 2023. Market yields had been climbing for months before that, and they have kept moving since. The table below uses indicative yields published in daily fixed income trackers, comparing mid-October 2026 with a year earlier.
| Segment | Mid-Oct 2025 | Mid-Oct 2026 | Change |
|---|---|---|---|
| 1-year AAA corporate bond | about 6.5% | about 7.7% | +1.2 pts |
| 3-year AAA corporate bond | about 6.65% | about 7.9% | +1.3 pts |
| 5-year AAA corporate bond | about 6.8% | about 8.0% | +1.2 pts |
| 10-year AAA corporate bond | about 7.1% | about 8.05% | +0.9 pts |
| 3-year AA corporate bond | about 7.4% | about 8.7% | +1.3 pts |
| 5-year A corporate bond | about 8.85% | about 10.1% | +1.2 pts |
Three things follow from this, and they affect different investors differently.
If money is maturing, reinvestment rates are higher. Someone whose fixed deposit or bond matures this quarter can now reinvest at yields roughly a percentage point above what was on offer a year ago. Bank deposit rates tend to lag market yields. In early October, large banks’ top general-category deposit rates were still in the 6.4% to 6.6% range, while at least one large NBFC raised its deposit rates by 15 to 40 basis points on the day of the hike.
If you hold older fixed-rate bonds, their market prices are lower. A bond’s coupon does not change, so its price has to fall when yields rise. This matters only if you sell before maturity. If you hold to the maturity date, you still collect every coupon and the face value, assuming the issuer pays.
The extra yield for stepping down in credit has not disappeared. Using the same figures, a 5-year A-rated bond offers roughly 2 percentage points more than a 5-year AAA bond. Whether that is fair compensation for the extra default risk is a judgement each investor has to make for themselves, and a review is the right time to make it deliberately rather than by drift.
A five-step review
Step 1: Restate your goals with dates
Split your fixed income into purposes. Money you will need within a year, money for a goal two to five years out, and money meant to generate income for longer each deserve different treatment. If a goal has moved closer, such as a down payment or a child’s fees, the bonds funding it should mature before the date, not after.
Step 2: Count what you actually hold
List every fixed income holding with its type, rating, maturity and yield: bank and company FDs, G-Secs, tax-free bonds, corporate bonds and NCDs, debt mutual funds, small savings and EPF or PPF if you want the full picture. Then add up the share in each. Most people discover the mix looks different from what they remember.
Step 3: Check the three dials
Duration, or sensitivity to rates. As a rough guide, a 3-year bond loses about 2.5% of its price for each 1 percentage point rise in yields, a 5-year bond about 4%, and a 10-year bond about 7%. If much of your holding is in long maturities and you may need to sell, you are more exposed than you think.
Credit quality. Note the rating mix. How much sits in AAA, AA and A-rated paper, and how much is unrated or unlisted? Check the date and outlook on each rating, not only the letter.
Liquidity. How quickly could you exit each holding, and at what cost? An FD can be broken with a penalty. A listed bond can be sold on the exchange, but thinly traded issues may take time or sell at a discount.
Step 4: Look for concentration and tax drag
Check how much sits with any single issuer, group or sector. A common practitioner rule of thumb is to keep any one issuer to a modest share of the fixed income allocation, often in the 5% to 10% range, though the right level depends on rating and your circumstances.
Then compare returns after tax. Interest on FDs and bonds is taxed at your slab rate. At a 30% slab with 4% cess, a 8% yield leaves about 5.5% after tax, and a 6.5% yield about 4.5%. Capital gains on listed bonds sold after 12 months are taxed at 12.5%, which can matter if you plan to sell for a profit.
Step 5: Decide with bands and costs in mind.
Set a drift band for each category in advance, for example, plus or minus 5 percentage points of your target, and act only when you cross it. Acting on every wobble produces costs and tax without improving anything.
Signals worth acting on, and ones that are not
| Worth acting on | Not a reason on its own |
|---|---|
| A goal is now closer than the maturity of the bonds funding it | Yields rose, so your bond price fell, while you hold to maturity |
| One issuer or sector has grown beyond your own limit | A friend or forum quotes a higher yield elsewhere |
| A rating has been downgraded or the outlook has turned negative | It is Diwali |
| You hold more rate-sensitive paper than your horizon supports | A single rate move that may or may not be repeated |
| Cash is idle because of automatic FD renewals at low rates | The wish to “do something” with the portfolio |
What acting now might cost you
Before you sell anything, count the friction.
- Selling a bond. You receive the market price, which may be below face value, and the gap between buying and selling prices can be wide on thinly traded issues.
- Tax on gains. Listed bonds sold after more than 12 months are taxed at 12.5% on gains. Sold within 12 months, gains are taxed at your slab rate. Unlisted bonds are taxed at slab rate regardless of the holding period.
- Breaking an FD. Banks usually reduce the rate and may charge a penalty on premature withdrawal.
- Debt fund exit loads and taxation. Check the load period, and note that gains on debt funds bought after April 2023 are taxed at slab rate.
The cheapest way to rebalance is often to use money that is already moving. Direct maturing deposits and bonds, new savings and coupon income toward the categories you want to grow, and leave the rest alone. This avoids selling at all.
An illustration
This is a worked example with made-up numbers, not a recommendation. Take an investor with ₹20 lakh in fixed income: ₹8 lakh in bank FDs maturing in 2027, ₹6 lakh in a 10-year government security and ₹6 lakh in NCDs from two NBFCs rated A.
A review turns up three things. First, 30% of the fixed income is in one sector, NBFC lending. Second, the 10-year security would lose about ₹42,000 in market value if yields rose another full percentage point, which matters only if the investor might need to sell. Third, the ₹8 lakh of FDs matures next year, and each extra percentage point of yield on that sum is worth ₹8,000 a year before tax.
The investor does not need to sell anything. The 2027 maturities can be redirected toward other categories when they arrive, and the investor can decide whether the 10-year security fits a horizon that is genuinely long. That is a rebalancing plan that costs nothing in tax or spread.
Your Diwali review checklist
- Write down each goal with its date and the amount needed.
- List every fixed income holding with type, rating, maturity, and yield.
- Total the share of FDs, government securities, AAA and AA bonds, A-rated and below, and anything unlisted.
- Note which holdings mature in the next 12 months.
- Check the latest rating date and outlook on each corporate issuer.
- Calculate your largest single-issuer and single-sector share.
- Work out post-tax yields at your own slab.
- Decide your drift bands and write them down.
- Plan to use maturities and new money first before selling.
- Set a date for the next review.
If you are comparing options for money that is coming due, GoldenPi’s collections pages group bonds by theme, including high-rated bonds, NBFC bonds and bonds maturing within a year.
Diwali Portfolio Review: FAQs
How often should I rebalance my fixed income allocation? Most investors review once or twice a year and act only when a holding crosses a band they set in advance, or when a goal date or an issuer’s credit changes. More frequent trading mostly adds cost.
Should I sell my existing bonds now that yields have risen? Not automatically. If you hold to maturity, the lower market price does not change what you collect. Selling makes sense only if the bond no longer fits your horizon, your credit comfort or your concentration limits, and after you have counted the spread and tax on the sale.
Does the RBI rate hike affect bonds I hold until maturity? The market price changes, but the coupons and face value you are owed do not. The risk that remains is the issuer’s ability to pay, which is a credit question rather than a rate question.
Is there an ideal allocation to fixed income? No single number fits everyone. It depends on your goals, time horizon, income stability and comfort with swings. Treat any rule of thumb as a starting point to test against your own situation.
Is Diwali a good time to invest in bonds? Bond yields depend on interest rates and credit conditions, not the festival calendar. Diwali is useful as a prompt to review, not as a reason to buy or sell.
Sources and disclosure
Policy figures are from the RBI’s MPC decision of 7 October 2026. Corporate bond yield levels are indicative figures from daily fixed income trackers published in October 2026 and a year earlier, rounded here. Deposit rate information is from bank and market reports in October 2026. Tax treatment reflects the Income-tax Act, 2025 as it applies from 1 April 2026. All figures are accurate as of 2 November 2026 and change often.
Fixed returns do not mean guaranteed or assured returns. Investments in corporate debt securities carry credit risk, market risk and default risk, including delay or default in payment. Please read all offer-related documents carefully. This article is for education and information only and is not investment, tax or legal advice, or a recommendation to buy, sell, hold or rebalance any security or portfolio. GoldenPi Securities Pvt. Ltd. is an Online Bond Platform Provider and debt broker registered with SEBI.
