Core Viewpoint - The Ministry of Finance and Economic Affairs has released the Medium-Term Debt Management Strategy (MTDS) for 2026–2030, outlining Treasury debt financing arrangements and management targets [1][3]. Debt Management Framework - The MTDS establishes a framework for Treasury borrowing and debt administration, aiming to meet government financing needs at the lowest cost while maintaining a prudent level of risk [2][3]. Debt Portfolio Structure - The Strategy details the current structure of the Treasury debt portfolio and introduces new criteria for loan distribution: non-indexed loans at 45%, index-linked loans at 40%, and foreign-denominated loans at 15%, reflecting a shift in Treasury debt composition [4][5]. Issuance Criteria - Updated criteria for the issuance of Government securities emphasize clear price formation for both index-linked and nominal bonds, with a minimum issuance size of ISK 50 billion for all maturities [5][6]. Maturity Management - The Strategy aims to keep the share of debt maturing within the next 24 months below 25%, with plans for annual bond issuance in international markets [6]. Information Disclosure - The MTDS includes provisions for information disclosure related to debt management, including an annual report on Government debt management to be published in the spring [6]. Annual Review - The Medium-Term Debt Management Strategy is based on the current fiscal strategy plan and is issued annually, covering a five-year horizon [7].

Market Performance - Benchmark equity indices Sensex and Nifty experienced a rally in early trade, with Sensex rising by 115.8 points to 85,640.64 and Nifty increasing by 40.7 points to 26,217.85, driven by positive global market trends and domestic institutional investor buying [1] - Among the gainers in the Sensex firms were Bajaj Finance, NTPC, Trent, Bharat Electronics, Adani Ports, and Eternal [1] - Conversely, Tech Mahindra, Infosys, HCL Tech, and Sun Pharma were identified as laggards [2] Global Market Trends - Asian markets showed positive performance, with South Korea's Kospi, Japan's Nikkei 225, Shanghai's SSE Composite, and Hong Kong's Hang Seng indices all trading positively [2] - US markets also ended higher on the previous Tuesday [2] Domestic Economic Outlook - As 2025 approaches its end, the market is expected to enter a consolidation phase with an upward bias, supported by strong domestic macros and positive earnings growth expectations for Q3 and Q4 of FY26 and FY27 [3] - Sustained domestic inflows and consistent buying by domestic institutional investors (DIIs) are anticipated to provide resilience to the market, although foreign institutional investors (FIIs) may sell during rallies, limiting sharp breakouts [3] RBI Actions - The Reserve Bank of India (RBI) announced an additional Open Market Operation (OMO) of ₹2 lakh crore to enhance liquidity and reduce yields, which is expected to positively impact credit growth and banking stocks [4] - The OMO purchases and dollar-rupee swap auctions will take place between December 29, 2025, and January 22, 2026, with the RBI committed to monitoring liquidity and market conditions [5] - This announcement follows a recent OMO purchase of ₹1 lakh crore and a $5 billion USD/INR swap auction [6] Investment Flows - On the previous Tuesday, foreign institutional investors offloaded equities worth ₹1,794.80 crore, while domestic institutional investors purchased equities worth ₹3,812.37 crore, indicating a divergence in investment behavior [6]

Group 1 - The Reserve Bank of India's (RBI) share in outstanding government securities has increased to 14.2% in June 2025 from 11.9% in June 2024 and 10.6% in December 2025 [2] - The share held by banks has declined, while the share of insurance companies has remained broadly unchanged during the same period [2] - The Central government is expected to borrow around ₹1.00 lakh crore every month until February 2026, with significant State Development Loan (SDL) issuances likely to compete with short-term government borrowings [2] Group 2 - Bond yields are expected to remain rangebound and move sideways in the coming days, as banks and mutual funds have been net sellers of government securities, while the "Others" category has emerged as a major buyer [3] - The RBI has intervened in the foreign exchange market to curb excessive speculation and defend the rupee, resulting in a net sale of foreign currency amounting to around $14 billion between June and August 2025 [4][5] - India's foreign exchange reserves declined from $703 billion in June 2025 to $690 billion by the end of October 2025, with reserves excluding gold and Special Drawing Rights (SDRs) falling by $30 billion during the same period [4][5] Group 3 - The RBI's recent Open Market Operations (OMOs) in the secondary market may be a tactical move to inject permanent liquidity to offset the liquidity drained due to forex interventions [6] - The RBI has shifted part of its intervention strategy towards the Non-Deliverable Forward (NDF) markets instead of spot market operations to manage currency volatility without impacting banking system liquidity [6]