The central government's net borrowings till July 25 stood at Rs 52,715 crore (Rs 527.15 billion), nearly 50 per cent of the budget estimate of Rs 1,07,194 crore (Rs 1,071.94 billion) for 2003-04, according to PNB Gilts.

Net borrowings so far were nearly seven per cent lower than the Rs 56,373 crore (Rs 563.73 billion) in the corresponding period of the previous year, PNB Gilts said in its latest review.

But the gross borrowings were higher by three per cent to Rs 74,030 crore (Rs 740.30 billion) till the third week of this month as compared to Rs 72,028 crore (Rs 720.28 billion) in the same period last year.

The gross mop-up constituted about 45 per cent of the budget estimate of Rs 1,66,230 crore (Rs 1,662.30 billion) for the entire year.

However, higher redemptions led to a marginal decline in the net borrowings so far.

Redemptions rose by over 36 per cent to Rs 21,315 crore (Rs 213.15 billion) till July 25 as against Rs 15,655 crore (Rs 156.55 billion) in the corresponding period last fiscal.

PNB Gilts said the government's buyback of securities from banks and financial institutions amounting to Rs 19,394 crore (Rs 193.94 billion) and the fresh issuance worth Rs 14,434 crore (Rs 144.34 billion) had lent hopes for the gilts markets because of expectation that the banks would invest the premium (received in cash) in the market.

"However, with the sharp rise in the United States treasury yield to 4.2 per cent, the sentiments again became cautious," PNB Gilts said, adding that some market players felt that the rise in the US interest rates would have a "trickle down" effect on the domestic rates too.