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Below is Post Budget quote on by Mahendra Jajoo, CIO fixed income, Mirae Asset Investment Managers

This budget focuses on long term vision, structural reforms and infrastructure and social development. Highest ever capital expenditure of 10tn, on a already high base of last year, is a very encouraging signal for continued positive momentum in Indian economy. Theme of inclusive development and empowerment of women and weaker sections of society would also further strengthen ongoing trend of widening participation by all sections in countries growing prosperity. On Fiscal front, net borrowings projected at INR 11.8tn works to 5.9% of GDP which is a huge improvement on 6.4% last fiscal. Further, finance minister reiterated the commitment to bring the deficit below 4.5% by FY 2025-26. With nominal GDP growth projected at 10.3% and inflation expected to continue easing in coming months, interested rates are expected to stabilize around current levels. A strong budget will also comfort the MPC on supply side management of inflation, growth momentum and fiscal stability which may in turn provide some elbow room for accommodative stance at the margin.

We expect MPC to shift to a pause mood along side other major global central banks by Q2CY23 even as there may still be some rate hike left. Long term rates may already have peaked in current cycle and may stabilize around current range for the time being. Encouraged by in-line borrowing schedule for FY 23-24 and the analysis that nearly 65% of the fiscal deficit is for capital expenditure, bond yields eased by 5-8 bps during the day. Benchmark 10Y govt bond yield was last trading at 7.29%, down 5 bps for the day.

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