The Reserve Bank of India’s pledge to buy as much as ₹1 lakh crore ($13.4 billion) of bonds this quarter has sent a wave of relief through the sovereign debt market. However, some say the move may be insufficient in the face of the nation’s near-record borrowing plan.

India’s benchmark 10-year bond yield extended its decline to 6.03% after posting its biggest intraday drop in two months on Wednesday following RBI’s explicit assurance of debt purchases.

“While RBI remains supportive of the market, we still believe demand-supply dynamics remain unfavourable,” Standard Chartered Plc analysts, including Nagaraj Kulkarni wrote in a note. The bank estimates the RBI would need to buy five trillion rupees of bonds to plug the demand-supply gap.

Indian bond yields surged to their highest in almost a year last month as the government’s plans to sell ₹12.1 lakh crore of debt in the fiscal year that started in April and global reflation bets dampened the demand for sovereign notes.

With the RBI unable to cut rates due to persistent inflation pressure, the tension between traders and the central bank kept building as auctions were scrapped and market participants pushed for a formal bond-purchase plan.

RBI chief Shaktikanta Das had earlier said the central bank bought ₹3.1 lakh crore worth of bonds in the previous fiscal year to March 31 and planned similar or more purchases this year. On Wednesday, the RBI said the new plan was included in its liquidity projections for the year, without giving details on purchases after the first quarter.

Fundamentals don’t justify the scope for a sizable rally in India’s 10-year government bonds considering “external conditions and lingering inflation risks,” Duncan Tan, a rates strategist at DBS Bank Ltd. wrote in a note.

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