Bond traders on edge over possible stimulus; seek assurance on fiscal goals

The government will make every effort to ensure that the revenue loss from its latest booster won't affect its goal to narrow the fiscal gap to 3.3 per cent of GDP

India’s drip-feed approach to reviving growth from a six-year low is doing little to lift the pall over the nation’s bond market.

Bond yields have risen in five of the past seven weeks as traders continue to fear that the government, which has avoided big-bang spending, may still resort to big giveaways. And this week’s oil shock has had investors looking for assurances that the administration will stick to a goal of narrowing its fiscal deficit.

“The mood is cautious and has been exacerbated by what happened in the oil market,” said Vijay Sharma, executive vice president for fixed-income at PNB Gilts