Fitch Ratings, which has a negative outlook on India, has again warned that the country may be downgraded to junk status if the government loosens fiscal policy in the run-up to the elections due by 2014, or sees a prolonged slowdown in economic growth.
A positive vote will have a direct impact on rupee. The additional limit auction in government bonds will be then well received by foreigners, said Debendra Dash, a dealer at Development Credit Bank (DCB) in Mumbai.
The government will raise the limit for foreigners by $5 billion, a government source said. The benchmark 10-year bond yield ended unchanged at 8.17%.