Fears of increased borrowings for doles spook the bond market
MUMBAI: The Narendra Modi effect in state elections may have helped
equity investors hit a home run on Monday, but bond markets reacted in
the opposite direction as investors fretted about a populist splurge by a
desperate government with its backs to the wall.
Bond prices fell and yields rose above the 8.90%-mark as investors felt that government borrowings could rise ahead of national polls which need to be held by May 2014. The ten-year benchmark government bond (carrying 8.83% interest rate) price on Monday dipped 34 paise to . 99.51 from its previous close at Rs 99.85.
Yield was at 8.91%, up 5 bps from 8.86% on Friday. Prices and yields move in opposite direction. "The market expects the government will dole out more freebies," Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance
Bond prices fell and yields rose above the 8.90%-mark as investors felt that government borrowings could rise ahead of national polls which need to be held by May 2014. The ten-year benchmark government bond (carrying 8.83% interest rate) price on Monday dipped 34 paise to . 99.51 from its previous close at Rs 99.85.
Yield was at 8.91%, up 5 bps from 8.86% on Friday. Prices and yields move in opposite direction. "The market expects the government will dole out more freebies," Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance
SHANE HAIDER
PGDM 3rd SEM
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