Mumbai: Indian federal bond yields hit two-week lows on Monday, 3 March, as a smaller-than-expected government borrowing programme for the fiscal year beginning in 1 April and a fall in US Treasury yields boosted market sentiment on debt.
In its budget for 2008-09 on Friday, the government said it would borrow Rs1.45 trillion ($36.3 billion) in 2008-09, down from Rs1.56 trillion in 2007-08 in its annual budget and below market expectations of Rs1.65 trillion.
“Investors had anticipated a huge borrowing programme and the lower target has improved market sentiment,” a chief dealer with a mutual fund said.
“Traders were sitting light ahead of the budget and the positive news has encouraged buying,” he said.
At 9:42am (0412 GMT), the 10-year yield was at 7.53%, the lowest since 18 February, according to Reuters data, and below Friday’s close of 7.56%.
Dealers said a fall in US Treasury yields also helped sentiment. The two-year note hit a four-year low as investors sought the safety of government bonds on a tumble in Asian stocks, as expectations mounted for US rate cuts.