Bond yield falls sharply as government cuts size of extra borrowing

The yield on the 10-year bond maturing in 2018 fell to 7.22 per cent, from 7.38 per cent on Tuesday

The yield on benchmark 10-year government bonds fell sharply as the Union government said it was reducing the size of its additional borrowing from the market. 

Bond market dealers said the announced cut in extra borrowing by Rs 300 billion in 2017-18 comes as solace, indicating confidence about revenue collection and resolve on fiscal discipline. 

The room for yields to fall further is limited. The market is concerned over a rise in inflation and the impact of uptick in crude oil prices, dealers said. The yield on the 10-year bond maturing in 2018 fell to 7.22 per cent, from 7.38 per cent