Fiscal and inflation concerns have been keeping the market on the edge

When the bank recapitalisation package of ₹2.11 trillion, including recap bonds of ₹1.35 trillion, was announced, there was a strong rally in PSU bank equities (NSE PSU Index up over 30 per cent) and additional tier-I bonds (up to 150 bps). Surprisingly, the sovereign bond market did not see a sell-off initially, even though this meant a large potential supply. Initial reactions were positive ...