The past fortnight has seen an untimely Diwali in Indian bonds market with firing of crackers one after the other, each rocketing the prices higher and higher.The first salvo was fired with the announcement of government’s market borrowing programme for the first half of FY-19. This resulted in a steep fall in yield of the benchmark 10-year security by 29 basis points in a single session. As a result, the domestic currency should continue to draw its strength from the foreign capital flows and improved domestic exports. This should provide an impetus to an already booming equity market.Going forward Indian rupee should trade in a range of 64.75 - 65.75 in the short term despite widening trade deficit. 10-year benchmark GOI security should trade in a range of 7.00-7.25 per cent and may attempt to breach 7.00 per cent, if FPIs enter the fray wholeheartedly to avail of the enhanced FPI limit.

Source: Economic Times April 11, 2018 06:45 UTC