The 10-year bonds had their biggest twoday gain in six weeks on speculation that finance minister Pranab Mukherjee in his Budget this week will cut subsidies and rein in the deficit from a 16-year high.
The benchmark 10-year yields dropped to a two-week low as the government said last week it will allow higher urea prices and free price controls on some fertilisers in a bid to reduce subsidies it pays farmers. The budget deficit may narrow to 5.5% of gross domestic product in the year starting April 1, from 6.8%, according to C Rangarajan, the government’s top economic adviser.
“Right now, there are expectations the deficit will ease as the recent increase in fertiliser prices suggest the government is keen on some fiscal consolidation,” Roy Paul, assistant manager of treasury at Federal Bank in Mumbai.
“The direction of bond yields will depend on the Budget.” The yield on the 6.35% note due January 2020 declined four basis points to 7.79%, according to the central bank’s trading system. The price climbed 0.26, or 26 paise per Rs 100
face amount, to 90.22.
India will borrow a record Rs 4.6 lakh crore next fiscal as debt payments double and the government only gradually withdraws policies to support economic growth, according to the median estimate of 13 economists and investors surveyed by a media group.
Source: http://economictimes.indiatimes.com/markets/bonds/Bonds-rise-on-hopes-that-FM-will-rein-in-fiscal-deficit-/articleshow/5609926.cms
The benchmark 10-year yields dropped to a two-week low as the government said last week it will allow higher urea prices and free price controls on some fertilisers in a bid to reduce subsidies it pays farmers. The budget deficit may narrow to 5.5% of gross domestic product in the year starting April 1, from 6.8%, according to C Rangarajan, the government’s top economic adviser.
“Right now, there are expectations the deficit will ease as the recent increase in fertiliser prices suggest the government is keen on some fiscal consolidation,” Roy Paul, assistant manager of treasury at Federal Bank in Mumbai.
“The direction of bond yields will depend on the Budget.” The yield on the 6.35% note due January 2020 declined four basis points to 7.79%, according to the central bank’s trading system. The price climbed 0.26, or 26 paise per Rs 100
face amount, to 90.22.
India will borrow a record Rs 4.6 lakh crore next fiscal as debt payments double and the government only gradually withdraws policies to support economic growth, according to the median estimate of 13 economists and investors surveyed by a media group.
Source: http://economictimes.indiatimes.com/markets/bonds/Bonds-rise-on-hopes-that-FM-will-rein-in-fiscal-deficit-/articleshow/5609926.cms
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