Today’s budget is a complete gamechanger for the long-term Indian bond market. With India's fiscal deficit set to go down to 4.5% of GDP by 2026, India will be one of the most sustainable fiscal stories among EMs. Even US has a fiscal deficit of more than 6% and is on a completely unsustainable path. This along with India's inclusion in global bond indices is a complete game changer for long maturity Indian government bonds. We expect Indian 10-year yields to come down to 6.5% by year end. This will be a big positive for PSU Banks and the Indian corporate sector.
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