MUMBAI: Indian government bond yields are expected to move sideways in early deals on Wednesday, with traders expecting some consolidation as the benchmark bond yield is unable to break comfortably past the key 6.20% level, while also awaiting fresh triggers.
The yield on the new benchmark 10-year bond is expected to move between 6.19% and 6.22%, a trader with a private bank said, compared with the previous close of 6.2032%.
The 2034 bond yield settled at 6.2531%.
“…another day of rangebound trades, with two major factors that could act as directional triggers for the bond market due on Friday,” the trader said.
New Delhi will sell the benchmark 2035 bond worth 300 billion rupees ($3.52 billion) on Friday, followed by the release of the country’s economic growth data for January-March.
The economy likely grew 6.7% in the quarter, faster than the 6.2% in the previous quarter, according to a Reuters poll.
Nomura said the first flush of growth indicators for April mostly appear soft and with growth below potential and inflation durably aligned to target, it expects the Reserve Bank of India to cut repo rate by another 100 basis points in 2025.
India bond yields flat; downward bias to prevail in medium term
The RBI’s policy decision is due on June 6, where a third consecutive rate cut of 25 basis points is widely expected.
The central bank has cut repo rate by 50 basis points since April and has infused around $100 billion in the last six months.
Meanwhile, bond yields are expected to decline further in the medium term, as broader sentiment remains favourable, ignoring the lower-than-anticipated central bank’s surplus transfer.
Comments
Comments are closed for this article.