New Delhi, Sept. 22 -- Indian bond yields have climbed sharply in recent weeks, with the benchmark 10-year government bond yield rising to around 7.07% on 21 September, its fifth consecutive weekly increase. For debt investors, that means higher yields are now available, but the decision is not as simple as choosing the highest yield. If bond yields rise further, the prices of long-term bonds can fall sharply, which can drag down the fund's NAV despite the higher income.

With the outlook for interest rates and inflation still uncertain, investors face a choice between locking in current yields and taking the risk that yields could move higher. Vaibhav Porwal, Co-founder of Dezerv, expects Indian bond yields to rise further in Q3 and Q4 F...