Informist, Wednesday, Feb 1, 2023

By Anjali and Nishat Anjum

NEW DELHI – Government bond yields slumped today due to a lower-than-expected gross borrowing figure announced in the Union Budget for the upcoming financial year starting April, dealers said. The Budget pegged gross market borrowing in 2023-24 at 15.43 trln rupees against the expectations of 15.8 trln rupees, according to an Informist poll.

The yield on the 10-year benchmark closed at its lowest level since Dec 16. The 10-year benchmark 7.26%, 2032 bond ended at 99.88 rupees, or 7.28% yield, as against 99.43 rupees, or 7.34% yield on Tuesday. 

"The lower than expected gross borrowing and significant small saving borrowing number, both are positive for gilts," a dealer at a state-owned bank said. "Also, few traders covered their short bets as they entered Budget with the expectations of high borrowing." 

The amount raised through debt will finance about 66.1% of the government's projected fiscal deficit of 17.87 trln rupees. The government aims to borrow 4.71 trln rupees through small savings in 2023-24. The borrowing through small savings is a significant amount and reduces the debt issuance burden for the market to absorb, dealers said. 

On a net basis, the government will sell bonds worth 11.81 trln rupees, against 11.08 trln rupees this year, without accounting for repayments for goods-and-services tax repayments, the Budget said. The government plans to fund the repayment of 781 bln rupees through the goods-and-services tax compensation fund.

The fiscal deficit target for the upcoming financial year was also in line with expectations, dealers said. The Budget pegged fiscal deficit at 5.9% of GDP, exactly the same as the median estimate of an Informist poll.

"Higher fiscal deficit is not much of a concern to the market as it still falls in the 5.9% target, which the market had already expected," a dealer at private bank said. For this year, the Budget scaled up its fiscal deficit estimate higher to 17.55 trln rupees from 16.61 trln rupees budgeted earlier.

During the presentation of the Budget, the yield on the 10-year benchmark bond rose to the psychologically crucial 7.40% level after the announcement of an increased outlay for capital expenditure. Dealers feared the government would borrow significantly after Finance Minister Nirmala Sitharaman announced capital investment outlay of 10 trln rupees in 2023-24, 33% higher than the current financial year.

In early trade, gilt yields inched lower prior to the presentation of the Union Budget at 1100 IST, as traders looked to cover their short bets, dealers said.

The gains in short-term domestic gilts were also supported by expectations of rate hike cycles nearing their end, dealers said. A majority of the government's record borrowing is expected to be conducted through gilts maturing in over 10 years.

In the face of the Budget, the market today ignored global cues. Going forward, traders are eyeing the two-day meeting of the US Federal Open Market Committee, which will announce its decision early on Thursday. According to the CME FedWatch tool, around 99% of futures traders expect the panel to raise the Federal funds target range by 25 basis points.

In over a year, the Fed has increased its federal funds rate by 425 bps from almost zero, over seven rate hikes.

Traders will take cues from comments by US Federal Reserve Chair Jerome Powell, which might provide insight on the future rate hike trajectory, dealers said.

"Now that the major hurdle of the borrowing figure is out, US FOMC does not seem to have much negative for us," a dealer at a state-owned bank said. "25 bps (increase in federal fund rate) is largely accounted for, but I believe that Powell might not give definite guidance."

According to data on the RBI's Negotiated Dealing System – Order Matching platform, the turnover today was 686.10 bln rupees, compared with 340.15 bln rupees on Tuesday.

Meanwhile, no trades were settled today with the digital rupee pilot, which has been the case for the last three trading sessions.

OUTLOOK

On Thursday, bond prices are seen taking cues from US Treasury yields post the US FOMC's monetary policy decision past midnight, dealers said.

Traders may also take cues from overnight movement in crude oil prices.

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.22-7.35%.

India Gilts: Sharply up on lower-than-expected FY24 gross mkt borrow

MUMBAI--1500 IST--Government bond prices rose sharply after the government announced a lower-than-expected gross borrowing in the Union Budget for 2023-24 (Apr-Mar), dealers said.

The Budget pegged the gross market borrowing at 15.43 trln rupees through sale of dated securities, against Informist poll expectations of 15.8 trln rupees. This is the government's highest-ever gross borrowing target.

On a net basis, the government will sell bonds worth 11.81 trln rupees, without accounting for goods and services tax repayments due in the upcoming financial year. This will finance about 66.1% of the government's projected fiscal deficit of 17.868 trln rupees.

Traders were relieved that the share of market borrowing to finance the fiscal deficit was similar to the current financial year and borrowing from small savings were seen robust, dealers said. The government aims to borrow 4.71 trln rupees through small savings in 2023-24.

The fiscal deficit was pegged at 5.9% of GDP in 2023-24, in line with market expectations.

"Government announced small savings borrowing number which is significant, also the senior citizen plan have altogether reduced pressure for the need to increase market borrowing," a dealer at a private bank said.

Finance Minister Nirmala Sitharaman said the government will increase the upper limit on Senior Citizens Savings Scheme from 1.5 mln rupees to 3.0 mln rupees in 2023-24, likely adding to the government's revenue, dealers said.

Some traders who had expected a higher borrowing number in the Union Budget covered their short bets, which also led to rise in bond prices, dealers said.

Gilts had fallen during the finance minister's speech on fears of a high fiscal deficit and borrowing target in 2023-24 after she said capital expenditure would rise 33% to 10 trln rupees, dealers said.

Sitharaman will speak at a post-Budget press conference at 1600 IST.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform, market-wide turnover was 604.55 bln rupees at 1500 IST, compared with 243.50 bln rupees at 1430 IST on Tuesday.

For the rest of the day, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.24-7.39%. (Kasthuri Akhil)

India Gilts: Surge as FY24 gross borrowing lower than expected

NEW DELHI--1225 IST--Government bond prices surged as the Budget announced a gross market borrowing number lower than expected, dealers said. Budget pegged gross market borrowing at 15.4 trln rupees, against the expectations of 15.8 trln rupees, according to an Informist poll.  

"Government has reduced borrowing when we had expected 15.8 trln rupees," a dealer at a state-owned bank said. 

The market fell earlier on fear of large borrowing number as the Budget increased outlay for capital expenditure, dealers said. Capital investment outlay was budgeted 33% higher at 10 trln rupees for the upcoming financial year. 

The fiscal deficit target for the upcoming financial year was in line with expectations, dealers said. The Budget pegged fiscal deficit at 5.9% of GDP, in line with the estimates of an Informist poll. (Anjali)

India Gilts: Up as traders cover short bets ahead of Union Budget

India Gilts: Up as traders cover short bets ahead of Union Budget

MUMBAI--0930 IST--Prices of government bonds rose amid low volume as traders covered their short bets ahead of the Union Budget, dealers said. Finance Minister Nirmala Sitharaman will present the Budget for 2023-24 (Apr-Mar)in Parliament at 1100 IST.

"Today is Budget day. There is no security, gilts can go anywhere today," a dealer at a state-owned bank said. "However, we expect large movement only post Budget speech when we know the borrowing figure."

The market keenly awaits the gross and net borrowing figure for the upcoming financial year starting April, dealers said. An Informist poll showed the government may announce a record borrowing programme of 15.8 trln rupees on a gross basis. On a net basis, the government may peg its issuance of dated securities at 11.68 trln rupees in 2023-24, up 4% from the budgeted 11.19 trln rupees in the current financial year, the poll showed.

The market expects a gross borrowing number of around 16 trln rupees, which is likely to keep the yield on the benchmark 10-year bond within 7.30-7.40%. However, if the gross borrowing number touches 16.50 trln rupees, the yield on the 7.26%, 2032 paper may shoot up to 7.45-7.50% levels, dealers said.

Moreover, traders eyed the fiscal deficit of the central government as it would give an insight to the borrowing number, dealers said. According to a poll by Informist, the Union Budget is likely to peg the government's fiscal deficit in 2023-24 (Apr-Mar) at 5.9% of GDP, narrowing it from 6.4% budgeted in the current fiscal year.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--the marketwide turnover was 31.60 bln rupees at 0930 IST, compared with 10.45 bln rupees at 0930 IST on Tuesday.

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond, is seen at 7.25-7.45%. (Nishat Anjum)

India Gilts: May open steady on caution ahead of Union Budget

NEW DELHI – Government bond prices are seen opening steady today amid caution ahead of the Union Budget, which will be presented by Finance Minister Nirmala Sitharaman in Parliament at 1100 IST today. Market may be volatile because of uncertainty before the Budget is presented, dealers said.

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.25-7.45% as against 7.34% on Tuesday.

The market will primarily focus on the gross and net market borrowing numbers for the next financial year starting April in the Budget, dealers said. Dealers expect a gross borrowing number of around 15.75-16.20 trln rupees, and are of the view that a gross borrowing figure higher than 16 trln rupees would push gilt yields sharply higher. On the other hand, a figure sharply below the 16-trln-rupee mark may bring down yields considerably.

An Informist poll showed the government may announce a record borrowing programme of 15.8 trln rupees on a gross basis. On a net basis, the government may peg its issuance of dated securities at 11.68 trln rupees in 2023-24, up 4% from the budgeted 11.19 trln rupees in the current financial year, the poll said.

Apart from the Budget, market players await the outcome of the US Federal Open Market Committee's meeting early Thursday, where the US central bank is seen raising rates by 25 basis points, much lower than the previous rate hike of 50 bps, dealers said.

According to the CME FedWatch tool, 99.4% of futures traders expect the panel to raise the Federal funds target range by 25 basis points. Over a year, the Fed has increased its federal funds rate by 425 bps from almost zero in seven rate hikes. (Shubham Rana)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.

Informist, Wednesday, Feb 1, 2023

By Anjali and Nishat Anjum

NEW DELHI – Government bond yields slumped today due to a lower-than-expected gross borrowing figure announced in the Union Budget for the upcoming financial year starting April, dealers said. The Budget pegged gross market borrowing in 2023-24 at 15.43 trln rupees against the expectations of 15.8 trln rupees, according to an Informist poll.

The yield on the 10-year benchmark closed at its lowest level since Dec 16. The 10-year benchmark 7.26%, 2032 bond ended at 99.88 rupees, or 7.28% yield, as against 99.43 rupees, or 7.34% yield on Tuesday. 

"The lower than expected gross borrowing and significant small saving borrowing number, both are positive for gilts," a dealer at a state-owned bank said. "Also, few traders covered their short bets as they entered Budget with the expectations of high borrowing." 

The amount raised through debt will finance about 66.1% of the government's projected fiscal deficit of 17.87 trln rupees. The government aims to borrow 4.71 trln rupees through small savings in 2023-24. The borrowing through small savings is a significant amount and reduces the debt issuance burden for the market to absorb, dealers said. 

On a net basis, the government will sell bonds worth 11.81 trln rupees, against 11.08 trln rupees this year, without accounting for repayments for goods-and-services tax repayments, the Budget said. The government plans to fund the repayment of 781 bln rupees through the goods-and-services tax compensation fund.

The fiscal deficit target for the upcoming financial year was also in line with expectations, dealers said. The Budget pegged fiscal deficit at 5.9% of GDP, exactly the same as the median estimate of an Informist poll.

"Higher fiscal deficit is not much of a concern to the market as it still falls in the 5.9% target, which the market had already expected," a dealer at private bank said. For this year, the Budget scaled up its fiscal deficit estimate higher to 17.55 trln rupees from 16.61 trln rupees budgeted earlier.

During the presentation of the Budget, the yield on the 10-year benchmark bond rose to the psychologically crucial 7.40% level after the announcement of an increased outlay for capital expenditure. Dealers feared the government would borrow significantly after Finance Minister Nirmala Sitharaman announced capital investment outlay of 10 trln rupees in 2023-24, 33% higher than the current financial year.

In early trade, gilt yields inched lower prior to the presentation of the Union Budget at 1100 IST, as traders looked to cover their short bets, dealers said.

The gains in short-term domestic gilts were also supported by expectations of rate hike cycles nearing their end, dealers said. A majority of the government's record borrowing is expected to be conducted through gilts maturing in over 10 years.

In the face of the Budget, the market today ignored global cues. Going forward, traders are eyeing the two-day meeting of the US Federal Open Market Committee, which will announce its decision early on Thursday. According to the CME FedWatch tool, around 99% of futures traders expect the panel to raise the Federal funds target range by 25 basis points.

In over a year, the Fed has increased its federal funds rate by 425 bps from almost zero, over seven rate hikes.

Traders will take cues from comments by US Federal Reserve Chair Jerome Powell, which might provide insight on the future rate hike trajectory, dealers said.

"Now that the major hurdle of the borrowing figure is out, US FOMC does not seem to have much negative for us," a dealer at a state-owned bank said. "25 bps (increase in federal fund rate) is largely accounted for, but I believe that Powell might not give definite guidance."

According to data on the RBI's Negotiated Dealing System – Order Matching platform, the turnover today was 686.10 bln rupees, compared with 340.15 bln rupees on Tuesday.

Meanwhile, no trades were settled today with the digital rupee pilot, which has been the case for the last three trading sessions.

OUTLOOK

On Thursday, bond prices are seen taking cues from US Treasury yields post the US FOMC's monetary policy decision past midnight, dealers said.

Traders may also take cues from overnight movement in crude oil prices.

The yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.22-7.35%.

India Gilts: Sharply up on lower-than-expected FY24 gross mkt borrow

MUMBAI--1500 IST--Government bond prices rose sharply after the government announced a lower-than-expected gross borrowing in the Union Budget for 2023-24 (Apr-Mar), dealers said.

The Budget pegged the gross market borrowing at 15.43 trln rupees through sale of dated securities, against Informist poll expectations of 15.8 trln rupees. This is the government's highest-ever gross borrowing target.

On a net basis, the government will sell bonds worth 11.81 trln rupees, without accounting for goods and services tax repayments due in the upcoming financial year. This will finance about 66.1% of the government's projected fiscal deficit of 17.868 trln rupees.

Traders were relieved that the share of market borrowing to finance the fiscal deficit was similar to the current financial year and borrowing from small savings were seen robust, dealers said. The government aims to borrow 4.71 trln rupees through small savings in 2023-24.

The fiscal deficit was pegged at 5.9% of GDP in 2023-24, in line with market expectations.

"Government announced small savings borrowing number which is significant, also the senior citizen plan have altogether reduced pressure for the need to increase market borrowing," a dealer at a private bank said.

Finance Minister Nirmala Sitharaman said the government will increase the upper limit on Senior Citizens Savings Scheme from 1.5 mln rupees to 3.0 mln rupees in 2023-24, likely adding to the government's revenue, dealers said.

Some traders who had expected a higher borrowing number in the Union Budget covered their short bets, which also led to rise in bond prices, dealers said.

Gilts had fallen during the finance minister's speech on fears of a high fiscal deficit and borrowing target in 2023-24 after she said capital expenditure would rise 33% to 10 trln rupees, dealers said.

Sitharaman will speak at a post-Budget press conference at 1600 IST.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform, market-wide turnover was 604.55 bln rupees at 1500 IST, compared with 243.50 bln rupees at 1430 IST on Tuesday.

For the rest of the day, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.24-7.39%. (Kasthuri Akhil)

India Gilts: Surge as FY24 gross borrowing lower than expected

NEW DELHI--1225 IST--Government bond prices surged as the Budget announced a gross market borrowing number lower than expected, dealers said. Budget pegged gross market borrowing at 15.4 trln rupees, against the expectations of 15.8 trln rupees, according to an Informist poll.  

"Government has reduced borrowing when we had expected 15.8 trln rupees," a dealer at a state-owned bank said. 

The market fell earlier on fear of large borrowing number as the Budget increased outlay for capital expenditure, dealers said. Capital investment outlay was budgeted 33% higher at 10 trln rupees for the upcoming financial year. 

The fiscal deficit target for the upcoming financial year was in line with expectations, dealers said. The Budget pegged fiscal deficit at 5.9% of GDP, in line with the estimates of an Informist poll. (Anjali)

India Gilts: Up as traders cover short bets ahead of Union Budget

India Gilts: Up as traders cover short bets ahead of Union Budget

MUMBAI--0930 IST--Prices of government bonds rose amid low volume as traders covered their short bets ahead of the Union Budget, dealers said. Finance Minister Nirmala Sitharaman will present the Budget for 2023-24 (Apr-Mar)in Parliament at 1100 IST.

"Today is Budget day. There is no security, gilts can go anywhere today," a dealer at a state-owned bank said. "However, we expect large movement only post Budget speech when we know the borrowing figure."

The market keenly awaits the gross and net borrowing figure for the upcoming financial year starting April, dealers said. An Informist poll showed the government may announce a record borrowing programme of 15.8 trln rupees on a gross basis. On a net basis, the government may peg its issuance of dated securities at 11.68 trln rupees in 2023-24, up 4% from the budgeted 11.19 trln rupees in the current financial year, the poll showed.

The market expects a gross borrowing number of around 16 trln rupees, which is likely to keep the yield on the benchmark 10-year bond within 7.30-7.40%. However, if the gross borrowing number touches 16.50 trln rupees, the yield on the 7.26%, 2032 paper may shoot up to 7.45-7.50% levels, dealers said.

Moreover, traders eyed the fiscal deficit of the central government as it would give an insight to the borrowing number, dealers said. According to a poll by Informist, the Union Budget is likely to peg the government's fiscal deficit in 2023-24 (Apr-Mar) at 5.9% of GDP, narrowing it from 6.4% budgeted in the current fiscal year.

According to data on the Reserve Bank of India's Negotiated Dealing System--Order Matching platform--the marketwide turnover was 31.60 bln rupees at 0930 IST, compared with 10.45 bln rupees at 0930 IST on Tuesday.

During the day, the yield on the 10-year benchmark 7.26%, 2032 bond, is seen at 7.25-7.45%. (Nishat Anjum)

India Gilts: May open steady on caution ahead of Union Budget

NEW DELHI – Government bond prices are seen opening steady today amid caution ahead of the Union Budget, which will be presented by Finance Minister Nirmala Sitharaman in Parliament at 1100 IST today. Market may be volatile because of uncertainty before the Budget is presented, dealers said.

Today, yield on the 10-year benchmark 7.26%, 2032 bond is seen at 7.25-7.45% as against 7.34% on Tuesday.

The market will primarily focus on the gross and net market borrowing numbers for the next financial year starting April in the Budget, dealers said. Dealers expect a gross borrowing number of around 15.75-16.20 trln rupees, and are of the view that a gross borrowing figure higher than 16 trln rupees would push gilt yields sharply higher. On the other hand, a figure sharply below the 16-trln-rupee mark may bring down yields considerably.

An Informist poll showed the government may announce a record borrowing programme of 15.8 trln rupees on a gross basis. On a net basis, the government may peg its issuance of dated securities at 11.68 trln rupees in 2023-24, up 4% from the budgeted 11.19 trln rupees in the current financial year, the poll said.

Apart from the Budget, market players await the outcome of the US Federal Open Market Committee's meeting early Thursday, where the US central bank is seen raising rates by 25 basis points, much lower than the previous rate hike of 50 bps, dealers said.

According to the CME FedWatch tool, 99.4% of futures traders expect the panel to raise the Federal funds target range by 25 basis points. Over a year, the Fed has increased its federal funds rate by 425 bps from almost zero in seven rate hikes. (Shubham Rana)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.