India bonds poised for weak open as tax overhaul stirs fiscal concerns
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Indian government bonds are poised for a weak open on Monday, tracking softer U.S. Treasuries, and as Prime Minister Narendra Modi's large tax overhaul has fanned worries of rising fiscal pressure.The benchmark 10-year bond yield will likely open 2-3 basis points higher, two private bank traders said. It ended at 6.4003% on Thursday, down 8 basis points and its steepest drop since May 13.Bond yields move inversely to prices.Indian markets were shut on Friday for a public holiday.In the biggest tax overhaul since 2017, Modi's government on Friday announced sweeping changes to the complex goods and services tax (GST) regime, which will make daily essentials and electronics cheaper from October."Our ballpark estimates suggest that the proposed rate rationalization could cost the exchequer more than 1.2 trillion rupees on annualized basis (over 0.4% of GDP)," Emkay Global economist Madhavi Arora said in a note.Assuming implementation from October, the fiscal impact for the financial year on general government financing should amount to 0.2% of GDP, assuming the losses will be shared equally by the state and centre, Arora said."This could further strain bond yields."A surge in U.S. Treasury yields has also weakened sentiment for local bonds, traders said.The 10-year U.S. Treasury yield has risen 7 basis points in the last three sessions.RATESIndia's overnight index swap (OIS) rates are seen rangebound in early trading, while paying pressure may continue in the longer-term rates amid rising U.S. Treasury yields.The one-year OIS rate was at 5.51% and the two-year OIS rate was at 5.45%. The liquid five-year OIS rate had settled at 5.6650% on Thursday.KEY INDICATORS: ** Benchmark Brent crude futures were little changed at $65.75 per barrel, after dropping 1.48% in the previous session ** Ten-year U.S. Treasury yield was at 4.3082%; two-year yield US2YT=RR at 3.7505%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
22 minutes ago
- Hindustan Times
Amid Trump tariffs, Jaishankar invites Russian firms to engage ‘more intensively' with India
External Affairs Minister S Jaishankar on Wednesday called upon Russian companies to engage "more intensively" with its Indian counterparts, citing New Delhi's initiatives that have opened more avenues for foreign businesses. S Jaishankar during the 26th Session of the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technical and Cultural cooperation, in Moscow(@DrSJaishankar) Addressing the India-Russia Business Forum in Moscow, Jaishankar highlighted the time-tested relationship the two countries have shared and called for deeper economic ties amid global uncertainty. "The 'Make in India' and other such initiatives have opened up new windows for foreign businesses. The modernisation and the urbanisation of India generate their own demands, flowing from shifts in consumption and lifestyle. Each of these dimensions represent an invitation for Russian companies to engage more intensively with their Indian counterparts. Our endeavour is to encourage them to rise to that challenge," he said. Jaishankar made the remarks after he highlighted how India's GDP was on a rise, drawing focus on the "need for large resources from dependable sources". "In some cases, it could be assured supplies of essential products, fertiliser, chemicals, and machinery, being good examples. Its rapidly growing infrastructure offers business openings to enterprises with an established track record in their own country," said Jaishankar. The External Affairs Minister's invite to Russian companies comes days ahead of US President Donald Trump's 50% tariff deadline for India. The Republican had earlier announced 25% duties on Indian imports, which he later doubled, citing India's oil trade with Russia. While one half of these tariffs have been imposed, the other are set to take effect on August 27. 'India-Russia ties one of steadiest' Further pushing for deeper trade ties between the two countries, S Jaishankar said in Moscow that while India and Russia's ties have been one of the steadiest over the years, it didn't reflect as much on the economic cooperation between them. "Our trade basket remains limited and till recently, so did our trade volume. It may have grown in recent years, but then, so too has the trade deficit. Both the diversification and balancing of trade now urgently mandate more strenuous efforts on our part. At the end of the day, they are essential not just to reach higher trade targets but even to sustain the existing levels," Jaishankar said. Pushing for both nations to contemplate more investments, joint ventures and other forms of collaboration, Jaishankar said that him and Russia's first deputy prime minister Denis Manturov want to send out a "clear message that an enduring strategic partnership must have a strong and sustainable economic component". Jaishankar also pushed for a sync between what the respective governments are discussing and what businesses are planning in order for India and Russia to collaborate better economically.
Mint
22 minutes ago
- Mint
Infosys' confidence in better future in contrast to TCS's mood in the IT camp
Infosys Ltd has become the first major Indian IT services company to express confidence in a turnaround, even as peers like Tata Consultancy Services Ltd (TCS) and Wipro Ltd adopt a cautious stance amid macroeconomic uncertainty and Gen AI disruptions. In a conversation with Kotak Institutional Equities analysts, Infosys chief executive Salil Parekh said tech spending is likely to improve. This comes after US President Donald Trump's tariff flip-flops have put client spending in limbo. 'Tech spending is likely to improve with lower macro uncertainty in developed markets,' said Kotak Institutional Equities analysts Kawaljeet Saluja, Sathishkumar S., and Vamshi Krishna, in a note dated 19 August. Infosys gets more than three-fourths of its business from developed markets, including the US and Europe. Most of Infosys's growth is driven by its financial services vertical, which makes up a little more than a fourth of its revenue. The brokerage also noted that the country's second-largest IT outsourcer is confident of meeting its FY26 guidance. 'The company is reasonably confident of meeting its FY2026E outlook,' Kotak analysts added, citing resumed transformation programs and easing trade uncertainties. The Bengaluru-based IT services company also raised the lower end of its FY26 guidance to 1-3% in constant currency terms in July, higher than the flat 3% growth it had projected in April, which was its slowest revenue guidance in at least a decade. Constant currency does not take currency fluctuation into account. Much of the increase in guidance was because of its acquisitions of US-based MRE Consulting and Australian cybersecurity services firm, The Missing Link, for about $98 million, both of which were announced earlier this year. However, Bengaluru-based Parekh was not all that sanguine on the macroeconomic environment back then. 'With the current outlook, we have seen a lot of the discussion on the economy worldwide having come to more stable situations but still seems that it's not fully settled," said Salil Parekh, chief executive of Infosys, during the company's post-earnings press conference on 23 July. A second reason for Infosys's newfound confidence is its reliance on its margin improvement plan. 'Competitive intensity for large deals remains elevated, but early focus and Project Maximus have helped maintain stability,' Kotak said. Project Maximus is Infosys' margins expansion programme launched in July-September 2023. It focuses on better large deal execution and reduced costs as one way to retain margins. Parekh's commentary is similar to that of New Jersey-based peer C. Vijayakumar, who is the CEO of HCL Technologies Ltd. 'We observed that the environment remains stable from an overall perspective, with some variations across specific verticals. It also did not deteriorate as feared at the start of the quarter,' said Vijayakumar, as part of his prepared remarks during the company's post-earnings press conference on 14 July. Infosys and HCLTech ended the April-June 2025 period with $4.94 billion and $3.55 billion, respectively, up 4.5% and 1.3% sequentially. Like Infosys, the third-largest HCLTech also narrowed its revenue guidance last month. The company now expects revenue growth between 3% and 5% in constant currency terms, higher than its 2% guidance on the lower end it had called out in April. Still, this is coming at the cost of margins. Last month, HCLTech lowered its full-year operating margin target to 17-18% from its earlier stated 18-19%. Although the management of the country's third-largest IT services firm attributed it to restructuring costs, analysts said this was to attract more business. Both companies reported a decline in profitability last quarter. Infosys and HCLTech reported operating margins of 20.8% and 16.3%, down 20 basis points and 160 basis points, respectively. Infosys' upbeat tone contrasts with TCS, which recently announced a 2% workforce reduction, about 12,200 employees, citing strategic initiatives. TCS posted a 0.59% sequential revenue decline last quarter, the worst among India's top five IT firms. Much of TCS's recent growth was driven by a $1.83 billion BSNL contract, which is nearing completion. Analysts warn that without a replacement, FY26 could see revenue decline. 'The magnitude of BSNL ramp-down (if it goes un-replaced) would mean that FY26 could be a year of declining revenue,' Motilal Oswal analysts said on 11 April. Despite this, TCS remains the most profitable among peers, with operating margins at 24.5%. While revenue growth has not been an issue for Infosys, similar concerns have been raised in the past on its ability to win deals valued at over $1 billion. Fourth-largest Wipro Ltd and fifth-largest Tech Mahindra Ltd have also adopted a cautious outlook amid macroeconomic uncertainties. They ended last quarter with revenues of $2.59 billion and $1.56 billion, down 0.35% and up 0.97%, respectively. However, a second brokerage said the mood across the largest IT outsourcers is expected to improve going forward. 'Demand, albeit soft, did not deteriorate. Increase in lower end of revenue guidance by INFO and HCLT indicates players don't expect deterioration going ahead too. Strong order backlog and a healthy deal pipeline likely limit downside,' said JM Financial analysts Abhishek Kumar, Nandan Arekal, and Anushree Rustagi, in a note dated 19 August. The brokerage added that the US Federal Reserve's interest rate cuts could benefit the country's $283 billion IT industry. 'Moderating inflation expectations, easing labour market situations (including IT Ops /Helpdesk/Software development jobs) and possibly the expectations that companies will absorb tariff-linked cost escalation have improved odds of Fed-rate cuts in September. This could possibly be a catalyst for mean reversal in IT Services' valuation,' said the JM Financial analysts. Rate cuts enable companies to borrow money from banks and financial institutions, with which they can fund their tech projects. For now, investors have not been all that enthusiastic about the country's top three IT outsourcers. Since the start of the year, TCS, Infosys, and HCLTech's shares have dropped 24.4%, 20.46%, and 22%, respectively.
Economic Times
22 minutes ago
- Economic Times
ET WLF: John Kerry, Shashi Tharoor, and Matteo Renzi to dissect fiery geopolitics
Synopsis John Kerry, Shashi Tharoor, and Matteo Renzi will discuss world affairs at The Economic Times World Leaders Forum in New Delhi. Their experience will provide insights into current geopolitical issues. Kerry will share his perspective on the US-India relationship. Tharoor, a diplomat and MP, brings global experience. Renzi, former Italian PM, handled various international challenges. Agencies Former US Secretary of State and presidential candidate John Kerry; celebrated diplomat, author and chairman of the parliamentary standing committee on external affairs Shashi Tharoor; and former Italian Prime Minister Matteo Renzi will be among the star draws, dissecting world affairs at The Economic Times World Leaders Forum this week in New geopolitical flux affecting every walk of life, insights culled from the heft of experience that Kerry, Tharoor and Renzi bring to the table will illuminate the invited audience at ET's flagship who served as the US special presidential envoy for climate with authority over energy and climate policy in the Biden administration till last year, has also previously chaired the US Senate foreign relations committee. He will share his thoughts on the fast-evolving recent relationship between the world's oldest and largest democracies. He was the Democratic Party's nominee for US president in 2004. Shashi Tharoor, a celebrated author and career UN diplomat who entered Indian politics after serving as undersecretary general at the global body, is a four-time Lok Sabha MP. He has been a practitioner and commentator in global diplomacy for decades. He recently led one of the all-party delegations that the government assembled to drum up support globally after Operation Sindoor. The delegation wrapped up its tour in the US, with a meeting with US Vice President JD Vance in June, after visiting Panama, Guyana, Colombia and Brazil. As Prime Minister of Italy between 2014 and 2016, Renzi handled a number of geopolitical challenges, including the European debt crisis, the civil war in Libya, Russia's military intervention in Crimea and the insurgency by Islamic State in West Asia. He has worked closely with global leaders such as Barack Obama of the US, Shinzo Abe of Japan, Abdel Fattah el-Sisi of Egypt and François Hollande of France.
