scorecardresearchBond yields drop as govt announces new 10-year note sale, Budget key trigger

Bond yields drop as govt announces new 10-year note sale, Budget key trigger

Updated: 31 Jan 2023, 04:13 PM IST
TL;DR.

  • The benchmark 10-year yield ended at 7.3438%, after closing at 7.4004% on Monday. It posted its biggest single session fall since Dec. 1, after rising six basis points in the last three sessions.

The benchmark 10-year yield ended at 7.3438%, after closing at 7.4004% on Monday.

The benchmark 10-year yield ended at 7.3438%, after closing at 7.4004% on Monday.

(Reuters) - Indian government bond yields ended lower on Tuesday after rising for the last three sessions, triggered by short covering and as the government plans to issue a new 10-year paper this week.

However, the major focus remained on the economic survey later in the day and the federal budget announcement on Wednesday.

The benchmark 10-year yield ended at 7.3438%, after closing at 7.4004% on Monday. It posted its biggest single session fall since Dec. 1, after rising six basis points in the last three sessions.

The yield however was largely unchanged for the first month of 2023.

The new 10-year bond is likely to witness strong demand despite the government being expected to announce an elevated borrowing schedule for the next fiscal year in its annual budget on Wednesday, traders said.

It is likely to keep its gross market borrowing below 16 trillion rupees for the next year as it does not want to destabilise the bond market with negative surprises, two sources close to the deliberations said.

The government will sell bonds worth 280 billion rupees ($3.41 billion) on Friday, including 120 billion rupees worth of a new 10-year paper.

"The expected gross and net borrowing numbers are at 25 trillion rupees and 17.75 trillion rupees, respectively, combined for the central and states," said Vinay Pai, head of fixed income at Equirus.

"The benchmark 10-year bond yield will range between 7.48% to 7.65% in April-September, as significant borrowing will be upfronted."

India is forecasting economic growth of 6%-6.8% in the next fiscal, slower than the projected pace for fiscal 2023 because of likely damage to exports from a global slowdown.

The forecast in the government's annual Economic Survey report is higher than the International Monetary Fund's projection of 6.1%.

 

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First Published: 31 Jan 2023, 04:13 PM IST