The central government will borrow Rs 7.50 tn and Rs 5.76 tn on gross and net basis respectively in H1 FY25 as indicated by the borrowing calendar.

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Mar 27, 2024

QuantEco Research || Lower share of H1 g-sec borrowing to support sentiment

Gross g-sec borrowing in H1 is normally heavier than H2, with share of H1 in full year borrowing lying between 57-58% (last 10-year average). For H1 FY25, the share comes to ~53%. Lower share of H1 borrowing at a time when bond index inclusion flows are underway could be supportive of sentiment. Market participants will now turn to the upcoming RBI policy on Apr 5th for cues. While we expect the MPC to maintain pause, a nudge towards adopting a neutral policy stance is possible, leading to a pivot in Aug-24. We maintain our 10Y g-sec call of 6.50% by Mar-25.