Traders in the Embattled Indian Sovereign Bond Market Finally have Something to Cheer

India bonds surge most since 2013 as Narendra Modi surprises on borrowing

Prime Minister Narendra Modi’s government in a surprise move announced 2.88 trillion rupees ($44.5 billion) of bond sales in the six months starting April 1, or about 48 percent of its annual borrowing plan, lower than than the 60 percent to 65 percent in previous years. The yield on the benchmark 10-year bonds plunged 25 basis points to 7.37 percent, set for its biggest slide since November 2013.

Lower bond sales ease one of the biggest worries for traders, who have been concerned about the government’s near-record borrowing as state-run banks, the main buyers of sovereign notes, stay away. Talks are also in progress with the central bank to raise limits for foreign investments in rupee debt, according to Economic Affairs Secretary Subhash Garg.

“This is the first step toward sustainable bull rally in bonds,” said Sandeep Bagla, associate director at Trust Capital Services India Pvt. in Mumbai. “This is an extremely smart move by the government, realizing the ground realities. This will lay ground for a handsome rally in bonds.”

The longest run of losses in India’s bond market since 1998 has been spurred by a vicious cocktail of rising debt supply, hardening global yields and the prospect of higher interest rates. Concerned by the selloff, the finance ministry last week met primary dealers to assess the market’s mood before the auctions, which normally begin in the first week of April.

Market Selloff

State-run lenders have been sellers of an average 5.09 billion rupees of sovereign bonds every day this year, data from the Clearing Corp. of India show. They bought an average 368 million rupees of debt daily in 2017. At the same time, overseas holdings of Indian government and corporate notes are set to decline for a second month.

Market participants are also speculating that policymakers will raise the limit for foreign investment in sovereign debt from the current 5 percent of the total outstanding.

The benchmark 10-year yield climbed 126 basis points in the last seven months. The surge has threatened to boost borrowing costs for Modi’s government and prompt a repeat of a recent situation when it had to pare the size of few auctions and scrap others.

“They want to ensure that the overall interest-rate structure in the economy remains well behaved,” said Vijay Sharma, executive vice president for fixed-income at PNB Gilts Ltd. in New Delhi. “If the yields keep going up, then all other rates in the economy go up. The bearish sentiment takes a backseat for now and we can see positive moves in bonds.”

Opinion Poll
With assembly election ahead With assembly election ahead, well known Digital Media platform has decided to gauge the mood of Chhattisgarh through its own opinion poll. As an aware voter and stakeholder of the democratic process, kindly do answer the following questions so that prevailing mood of state can be ascertained.
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ओपिनियन पोल
छत्तीसगढ़ की आगामी विधानसभा चुनाव के लिए डिजिटल मीडिया ‘’ नेसटीक ओपिनियन पोल करनेका निश्चय किया है. अतः आप नीचे दिए सवालों के निष्पक्ष जवाब देंताकि राज्य की आने वाले दिनों की सही सियासी तस्वीर सामनेआ सके. कृपया अपना मत जरूर दें- With assembly election ahead
विधानसभा क्षेत्र
फ़ोन नं
विधानसभा चुनाव में सबसे बड़ी पार्टी कौन सी होगी ?
किस पार्टी को कितनी सीटें मिलेगी?
अगले मुख्यमंत्री के रूप में किसे देखना चाहेंगे?
क्या आपके क्षेत्र में विकास दिखाई पड़ रहा है?
क्या छत्तीसगढ़ का किसान भाजपा शासन से संतुष्ट है?
जो रोजगार छत्तीसगढ़ सरकार ने दिया, क्या उससे युवा वर्ग संतुष्ट है?
राज्य सरकार ने महिलाओं के सशक्तिकरण के लिए जो किया, उससे महिलाएं संतुष्ट हैं?
क्या आप अपने विधायक से संतुष्ट हैं? उन्होंने अपने वादे पूरे किए या अधूरे हैं उनके काम?
क्या आप अपने क्षेत्र की सरकारी सुविधाओं सेसंतुष्ट हैं?
क्या नक्सली समस्या पर नियंत्रण हुआ है?
क्या प्रदेश के मंत्रियों के कामकाज से संतुष्ट हैं?
-देश हित के लिए मतदान अवश्य करें-

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