India G-sec yields were mildly higher tracking moves higher in treasury yields (though low beta correlation still exists),sharp depreciation in INR, and tight liquidity conditions. However, yields fell later in the month on improvement in liquidity conditions as well as positioning for a 25-bps rate cut by the RBI MPC in Feb. The GOI projected FY26 fiscal deficit at 4.4% of GDP – along expected lines. Despite lower aggregate fiscal deficit,the gross borrowing was higher at INR 14.82tn vs 14.4tn expected (as a larger share of deficit was being financedthrough market borrowings). However, markets largely shrugged off this on hopes that the RBI MPC may cut rates in Feb (with a lines but easing factored in already). The FY25 RE estimates were brought lower to 4.84% on lower capital spending
