Mutual funds boost short-term Indian corporate bond buys as May inflows hit two-year high, driven by surplus liquidity and yield curve shifts.

• May corporate bond fund inflows tripled to 119.8 billion rupees, highest since March 2023, focusing on three, to five-year papers.
• RBI ending rate easing may slow flows, but short, term bonds stay attractive as yields rise and spreads look appealing.
• Yields on 2-3 year AAA corporate bonds fell 25-28 bps in May, remaining 10 bps below end, May levels despite recent rate cuts.