Bond yields rising: Market watchers weigh in on RBI's OMO and auction plans

Bond yields have been inching up over the last one week, following the government’s announcing a bigger borrowing plan for this fiscal and later the RBI raising the consumer price inflation forecast slightly for the first half of FY22.

The bond market has been disappointed by the RBI not mentioning any schedule for open market operations in its monetary policy.

In an interview to CNBC-TV18, R Sivakumar, Head-Fixed Income at Axis Mutual Fund and Mahendra Jajoo, Head–Fixed Income at Mirae Asset Global Investments spoke at length about the latest open market operation (OMO) and auction plans.

“The Reserve Bank of India (RBI) is going to using its firepower in terms of OMOs to ensure that there is no significant yield spike,” Sivakumar told CNBC-TV18 on Tuesday.

“My expectation is that if you see is selloff certainly you will see RBI coming in. So it’s kind of a tight range in the near-term,” he said.

Meanwhile, Jajoo said, “Our expectation is that the yields are likely to remain in the region of 6-6.25 percent.”

On corporate borrowing, he said, “The borrowing requirement has been increasing in line with the growth in the economy and the working capital requirement, in our view, are going to increase further. Since the time the liquidity normalization process has started, the corporate borrowing range has gone up by about 75 bps from their normal low.”

For entire discussion, watch the video