IGI Logo

Below Reaction on Budget 2026 By Abhishek Bisen, Head- Fixed Income, Kotak Mahindra AMC.

The Union Budget for FY?2026–27 reiterates the government’s focus on fiscal discipline and debt consolidation, underscoring its commitment to long?term macroeconomic stability. Revenue projections appear balanced and conservative, and the continued emphasis on capital expenditure suggests that the fiscal stance is unlikely to be inflationary—an encouraging backdrop for markets over the medium to long term. Against a backdrop of global uncertainty and domestic headwinds, the overall budget framework merits a positive assessment.

From a fixed?income standpoint, the fiscal deficit target of 4.3% of GDP and net market borrowings of ?11.70 trillion are largely in line with expectations. However, the gross borrowing programme of ?17.20 trillion via dated securities is higher than anticipated. Consequently, the near?term bond market reaction is expected to be mildly negative, with yields likely to edge higher. In the immediate period, the 10?year benchmark government security is expected to trade in the 6.65–6.75% range, with market attention now shifting to forthcoming guidance from the Monetary Policy Committee on the future trajectory of interest rates.

Above views are of the author and not of the website kindly read disclaimer