India's debt and forex markets will await Finance Minister Palaniappan Chidambaram's interim budget speech on Monday where he will unveil the government's fiscal deficit for 2013/14 as well as the deficit targets and borrowing numbers for the next year. Investors largely expect Chidambaram to stick to his fiscal deficit target, but analysts will closely watch whether he pushes some subsidies and spending into next year. Bond dealers say market largely expecting a gross borrowing target around 6.2-6.4 trillion rupees for FY15. Rupee traders will look for the expenditure numbers from the budget with the currency likely to see a small rally if the fiscal deficit is contained within 4.8 percent of the GDP.
Otherwise, a higher budget deficit will hurt stocks and rupee. The rupee is expected to hold in the current 62.05 to 63 range to the dollar next week. U.S. FOMC minutes due next week will be watched with a hawkish view likely as the Fed resumed tapering move despite weak payrolls.
KEY FACTORS/EVENTS TO WATCH Mon: Finance Minister P. Chidambaram to present interim budget for 2014/15 at 0530GMT. Wed: Jan FOMC minutes. Money supply data. Fri: Foreign exchange reserves data.