Fears of stimulus adding to already record borrowings led to benchmark sovereign notes capping their worst performance in 16 months in August
The stunted development is rooted in structural issues with the economy and not the structure of markets
Global drivers are also supportive as US yields harbour expectations of a dovish US Fed and a likely rate cut at the meeting later this month
What could be troubling the market is the unknown quantum of public spending via borrowings, which are but sovereign liabilities, beyond the Rs 7 trillion fiscal gap
The bond market has been stress-tested, and is seeing structural strengthening
Indian sovereign bonds declined in May for the ninth month out of 10 as overseas investors dumped $2.6 billion of rupee-denominated bonds