Spotlight on borrowing plan

OUTLOOK: Government securities

The trend in the government securities market hinges on the government's borrowing programme for the new financial year.

The Centre has budgeted for a market borrowing of around Rs 1,20,000 crore in the next financial year.

However, the market is expecting a borrowing schedule of little less than the budgeted figure.

Market dealers feel that the 10-year benchmark paper is likely to rule in the range of 6.60-6.62 per cent till the financial year end. It might go up after that, said a dealer.

This is because players are learnt to be attempting to hold on to an artificial rate for valuation of their portfolios for the year end.

The inflation rate remains a concern due to uncertainties in crude prices.

The market feels that even if the regulators have been hinting at stable interest rates, crude oil prices and the tightening of global interest rates globally are likely to affect the overall sentiment.

Recap: The 10-year benchmark, 7.38 percent 2015 gilt reached a high of 6.74-6.75 per cent last week, but the yield came off to 6.65 per cent on the back of the statements of the Union finance minister.

The minister hinted at stable interest rates, at least for the coming six months.