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Mumbai, Feb. 29

Bond prices moved up as a positive reaction to the Union Budget 2007-08 as the market borrowing was lower than last year and as the Government achieved the fiscal deficit targets. According to a senior official from a public sector bank, the market was expecting a harsh budget, as the economic survey indicated that inflation was still a big concern. But after the Finance Minister announced that the market borrowing for 2007-08 was slightly lower than last year, the bond ma rket reacted favourably. The Government also achieved the targets for fiscal deficit at 3.1 per cent, against the estimated 3.3 per cent.

The 7.99 per cent-9 year-2017 paper opened at Rs 102.7 (7.78 per cent YTM) and closed at Rs 102.81 (7.56 per cent YTM), against the previous close of Rs 102.58 (7.60 per cent YTM). The 8.33 per cent-28 year-2036 paper opened at Rs 103.48 (8.01 per cent YTM) and closed at Rs 104.08 (7.96 per cent YTM), against the previous close of Rs 103.55 (8.01 per cent YTM). But if the liquidity continues to be under pressure, it is unlikely that these high prices will sustain, the official added.

— Our Bureau

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