Relationship Between Interest Rate & Debt Instruments

Relationship Between Interest Rate & the return from the Debt Instruments

You have to understand the relationship between these 2 things. Here is a Rule.

There is an inverse relationship between the interest rates and NAV of Bond Funds.If the Interest rate rises, the NAV of the Bond fund will fall and vice versa means when the interest rate will fall, the NAV of the Bond fund will rise.

This means that whenever the interest rate will go down, the money will become cheap. So now the Businesses can borrow more money at low cost and thus the stock market will go up. And when the interest rate will be high, the stock market will suffer.