Indranil Sengupta believes there are risks to 4.1% fiscal deficit target for FY15 as tax revenue projections look ambitious. But he does not think the government's borrowing programme is at risk.
Markets were surprised with the 25 basis points repo rate hike and now there is a fear that rates may be hiked further. But even with the repo rate hike, the yields range for the 10-year bonds could be 8.50-9 percent for the next 2-3 months, says Manish Wadhawan of HSBC.
The Reserve Bank of India, in consultation with the government, has issued an indicative calendar for issuance of Government dated securities (G-Secs) for the second half of the fiscal year 2013-14.
Brijen Puri, JPMorgan, is looking at what the government will do with the Rs 50,000 crore of switch that it was planning to do. This is where he will be looking for cues going forward as far as bond yields are concerned.
Bond prices fell in after noon trades on news that the government will announce a fresh borrowing program on Monday. The 10 year yield rose from 8.45% to 8.53%.
The government will have to consider cancelling or postponing its borrowing programme if bond yields stay "unacceptably" high, a senior finance ministry official with direct knowledge of the matter told Reuters on Friday.
The Reserve Bank of India is closely monitoring liquidity in the banking system and does not see any sign of stress as of now, going by the current call rates, one of its deputy governors said on Monday.
The Reserve Bank of India (RBI) does not see any challenge in managing the borrowing programme for fiscal year 2011/12, a deputy governor said, after the government unveiled a lower-than-expected borrowing figure in its federal budget.