Indian bond yields fall 8 bps after FM Sitharaman announces reduced borrowing for FY25

Interim Budget 2024: In January, the yield on the benchmark bond eased 3-4 basis points due to good demand from domestic and overseas investors.

Yield on government securities fell by 8 basis points on February 1 after Finance Minister Nirmala Sitharaman announced lower gross borrowing for the next financial year, during her presentation in the Interim Budget 2024 on Thursday. The yield on 10-year benchmark bond 7.18 percent 2033 were trading at 7.0685 percent at 11:52 AM on February 1, as compared to 7.1442 percent close on the previous trading session.

For the financial year 2024-25, the government announced gross market borrowing of Rs 14.13 lakh crore and net borrowing of Rs 11.75 lakh crore.

Follow our LIVE coverage of the budget

This is sharply lower than Rs 15.43 lakh crore announced for the current financial year.

In an election year, the government presents only an interim budget or seeks a vote on account, and leaves it to the next government to present the full budget.

In January, the yield on the benchmark bond eased 3-4 basis points due to good demand from domestic and overseas investors. The demand from foreign investors has increased after the inclusion of the Indian bond in the global market.

JP Morgan Chase & Co will add Indian government bonds to the JPMorgan Government Bond Index-Emerging Markets starting June 28, 2024.

“Inclusion of Indian bonds in global indices might attract $15 billion - $20 billion of flows next year, potentially causing yields to fall as more buyers chase the same amount of bonds,” Godambe had said.

Moneycontrol on December 28, 2023 reported that the expected range for the 10-year benchmark government bond is 6.70-7.30 percent.