MUMBAI: Indian government bond yields inched higher on Friday in the absence of any key domestic triggers with traders slightly disappointed by the central bank's announcement of term repos to ease cash tightness in the banking system.
The Reserve Bank of India will conduct term repo auctions in March to address anticipated liquidity tightness emerging from corporate advance-tax outflows around the middle of next month, it said in a statement on Tuesday.
Traders had been hoping for open market purchase of bonds by the central bank to help tide over the liquidity scenario but after the RBI announcement, those hopes have started fading.
"The market is likely to remain fairly range-bound until March. We could possibly see the next round of punting happen around the factory output and inflation data time next month," said Anoop Verma, vice-president of fixed income at DCB Bank.
The benchmark 10-year bond yield closed up 1 basis point at 8.80 percent after moving in a narrow range of 8.78 to 8.80 percent during the day. On the week, yields fell just 1 bp.
Broadly, dealers expect the 10-year paper to hold in a 8.75 to 8.85 percent range until the end of this month.
Traders are also awaiting the December quarter growth data due to be released after market hours on Feb. 28 for near-term direction.
In the interim budget on Monday, the finance minister said India's economy will recover to at least 5.2 percent growth in the second half of 2013/14 from 4.6 percent in the first half.
Traders will continue to monitor moves in the US treasuries and global crude oil for direction in the absence of any other domestic triggers.
In the overnight indexed swap market, the benchmark five-year swap rate closed steady at 8.45 percent, while the one-year rate was also unchanged at 8.64 percent.
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