MUMBAI: Indian government bond yields turned flat on Wednesday following an initial uptick, after the government kept its borrowing plan for the second half of the financial year unchanged at $78.71 billion.
The 10-year benchmark 7.18% 2033 bond yield was at 7.1515% as of 10:00 a.m. IST, after ending at 7.1441% in the previous session, a trader with a private bank said.
“Since there was no change on the borrowing front, the calendar is not a major market-moving factor for now, barring some hiccups as the supply on the 10-year is slightly on the heavier side,” a trader with a state-run bank said.
India maintained its plans to borrow 6.55 trillion rupees ($78.71 billion) through bond issues in the months of October-March, which includes 1.45 trillion rupees through 10-year bonds, which is 22% of the overall borrowing.
It plans to borrow between 300 billion and 390 billion rupees a week in the second half of the fiscal year after completing 8.88 trillion rupees borrowing in April-September.
India bond yields rise, as spike in Treasury yields hurts appetite
Meanwhile, US yields stayed elevated, with the 10-year yield trading above the 4.50% handle on bets of higher-for-longer interest rates, while the benchmark Brent crude contract stays near the $95 per barrel mark.
These factors have dented investors’ appetite and broadly offset the bullishness from JPMorgan’s inclusion of India in its emerging market debt index.
Domestic benchmark bond yield will likely rise further in the next few weeks amid higher crude prices and surging US yields, providing the right entry point for investors, said Aneesh Srivastava, executive director and chief investment officer at Star Health Insurance.
The FTSE Russell, which has India on its watchlist for inclusion in the FTSE Emerging Markets Government Bond Index, will announce a decision on Thursday.
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