In view of the additional expenditure following the approval of the first supplementary demand for grants by the Parliament, the government will access market to raise Rs 45,000 crore additional resources during the remaining period of this fiscal. The Reserve Bank of India has decided to issue marketable dated securities for an amount of Rs 45,000 crore during the remaining period of the current fiscal.
Talking about how cheaper bonds would become after this move, dealers said it all depended on RBI’s action on Saturday.
“If there is a significant cut in the key interest rates by the RBI, which the market is expecting, by 100-150 bps, the yields may hover at the same levels. However, if there is a cut by about 50-75 bps, yields may show a rising trend touching 6.85% levels,” said a dealer with a brokerage firm.
However, gilts are likely to consolidate later next week as government’s additional borrowing programme of Rs 45,000 crore may weigh on sentiment, they said.
