The GST rate reductions had a beneficial impact on the proceeds of government effects (G-SECs), with the return of the 10-year-old benchmark G-SEC that alleviated around 5 basic points while market players picked up the fear that the government could borrow more to overcome the fiscal impact of the cuts.
The yield of the 10-year-old benchmark (6.33 percent GS 2035) fell by 6.49 percent compared to the previous closure of 6.54 percent, in the midst of sufficient liquidity in the banking system.
RK Gurumurthy, treasurer, Karnataka Bank, said: “The GST section is a great positive and should be a shot in poor during the festival season. In the background of sufficient liquidity and benign percentages, this should develop into a growth momentum.
“One concern will be stuck if the GST collections will dent and lead to raised loans. We will have to wait to see what the loan calendar looks like as it is announced later this month and how the shortage of the income that arises from the GST cuts become in balance.”
Gurumurthy emphasized that four tranches from CRR (Cash Reserve Ratio) are starting to start from Saturday, which implies that bond supplies will not drain or influence liquidity prices – the steepness of the speed curve must also be seen as a encouraging game.
As soon as the uncertainties about rates fall, the bond returns must return to levels that are seen in Q1, he added.
Nuvama Wealth Management noted in a report that the 10-year-old benchmark was opened 1 basic point lower at 6.53 percent, because the fear of extra borrowing in FY26 ended after the outcome of the GST Council meeting at the end of Wednesday.
The government estimates a net turnover loss of approximately £ 48,000 crore of the decision of the GST Council to switch to a tax rate for goods and services with two slabs to come into effect from September 22.
“The market participants expected an estimate of £ 1 lakh crore. The decrease in the American treasury will prepare at night after shocking vacancies also supported the malaise in local yields.
“The 10-year-old benchmark closed 5 BPs lower at 6.49 percent versus 6.54 percent, because the participants wanted to go to lower bonds on the hope that the government could reduce the share of these bonds in its October-march loan calendar,” said Nuvama Wealth Management team fixed income team in fixed income.
In the meantime, the RBI received a robust response to its 8 -day variable Reverse Repo (VRRR) security, whereby banks place offers to use liquidity for RS 1.80.955 Crore against the registered amount of £ 1.50 Lakh Crore.
The accepted RBI offers an aggregation of £ 1.50.023 crore with the weighted average rate of 5.49 percent. Banks’ had surplus liquidity in the amount of £ 2,97,367 crore on 3 September 2025, according to RBI data.
Published on September 4, 2025
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