FM's tax cuts: Prospects of higher govt borrowings spook bond market

10-year yield rises to 6.82% at 12:35 p.m. from yesterday's close of 6.64%; rupee gains 34 paise to trade at 70.98 a dollar

The bond yields soared on tax cut announcements by the Union Finance Minister on concerns that fiscal deficit would not likely get contained at 3.3 per cent of the gross domestic product (GDP), and may prompt the government to borrow extra in the later part of this fiscal.

The rupee, however, strengthened sharply following cues from the stock market.

The yields on the 10-year bond, rose to 6.82 per cent at 12:45 p.m., while the rupee was trading at 70.98 a dollar. The yields had closed at 6.64 per cent on Thursday, while the rupee had closed at 71.32 a dollar. Sensex