(Bloomberg) -- For one of India’s top-performing fund managers with a sense of history, the rally in the nation’s sovereign bond market is in its final stretches.

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A monetary easing cycle typically leads to a 100-125 basis point drop in yields, according to Devang Shah, who oversees 1.2 trillion rupees ($14.1 billion) as head of fixed income at Axis Asset Management Co. With the 10-year yield down more than 80 basis points over the past year, further declines may be limited, he said.

The outlook is prompting Shah to consider gradually reducing duration in some funds, moving toward shorter-term notes and buying more corporate bonds. This stance puts him at odds with most traders and strategists, who remain bullish on Indian government debt, expecting continued rate cuts and ample liquidity.

“The next play will be in short bonds due to huge surplus liquidity,” he said, adding that he plans to cut Axis Dynamic Bond Fund’s maturity from eight years to three-to-five years as the rate cycle nears its end.

The Reserve Bank of India’s aggressive cash injections and rate cuts recently pushed the 10-year yield to a three-year low, helping Shah’s government bond fund beat 94% of its peers over the past 12 months with a 12.8% return. The fund ranks among the top five performers in the past three years, according to the Association of Mutual Funds in India’s website.

The Axis Dynamic Bond Fund, another product he manages, has handed investors a 11% return in the past year, data compiled by Bloomberg show.

Shah says the rally is losing steam and is preparing for a shift in market dynamics that many are yet to price in. Nomura Holdings Inc. expects the 10-year yield to drop to 5.75% by December, while QuantEco Research recently cut its forecast to 6% by March, from 6.2% earlier.

Read: India Bond Rally to Spread on Deeper Easing, ICICI Prulife Says

The benchmark yield ended at 6.36% on Wednesday. India’s financial markets were closed Thursday for a public holiday.

“RBI is keeping liquidity too easy,” Shah said. The easy-money condition will “lead to a chase for assets on the short term, resulting in a collapse of shorter-tenor spreads.”

The money manager said he expects the RBI to cut the benchmark rate by another 50 basis points this financial year, and conduct three trillion rupees in bond purchases. The authority this week announced 1.25 trillion rupees in open-market purchases for May, extending its liquidity injection drive to support the economy amid global trade uncertainty.

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“The minute there’s a resolution on US tariffs, and if they are largely rolled back, the rally in India bond markets will likely be done,” Shah said. A trade agreement will clarify the impact on inflation and growth, giving traders cues on future rate cuts.

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