Ten-year bonds fell today, snapping a two-day gain, on speculation government borrowings will rise in the new financial year starting April 1.
India will borrow a record Rs 4.6 lakh crore ($99.3 billion) in the next financial year as debt payments double.
“Bond yields have risen because there is uncertainty before the budget,” said Krish Ramkumar, who manages the equivalent of $1 billion of debt at Sundaram BNP Paribas Asset Management Co in Mumbai. “Bonds have probably rallied too far in the past two days and some investors are possibly unwinding their long positions.”
The yield on the 6.35 per cent note due January 2020 rose one basis point to 7.8 per cent as of the 5:30 pm close in Mumbai, according to the central bank’s trading system. Earlier, it reached 7.75 per cent, the lowest rate since February 2. The price fell 0.09, or 9 paise per 100 rupee face amount, to 90.13. Earlier, bonds rose on speculation the government will target a reduction in its fiscal deficit from a 16-year high in this week’s budget. Minister of States Finance Namo Narain Meena said yesterday an “expansionary fiscal stance” was a short-term measure to support economic growth.
