Borrowing plan to chart the way forward

GOVERMENT SECURITIES

The trigger which the securities market players are waiting for from the Budget is the government's borrowing programme target. The market expects the borrowing target to be in the range of Rs 95,000-1,05,000 crore.

Given the government's commitment towards bringing down the fiscal deficit in line with the Fiscal Responsibility and Budget Management Act, the market is expecting a lower borrowing target.

Dealers said if the borrowing programme is below Rs 95,000 crore, there will be a rally in government security prices with good demand from banks and primary dealers.

If this figure is anywhere above Rs 95,000 crore, the market may witness selling pressure with players rushing to liquidate their holdings. The 10-year benchmark 7.38 per cent 2015 paper is likely to rule in the band of 6.40-6.65 per cent.

Recap: Government security prices remained range-bound last week in anticipation of Budget announcements.

The State Development Loan (SDL) floated to raise Rs 6,300 crore for 16 states could barely manage to mop up less than half of the targeted amount.