MUMBAI: Indian government bonds started the holiday-shortened week little changed, with traders watching demand at a state debt auction later in the day.
The yield on the benchmark 10-year note was at 6.5176% as of 9:40 a.m. IST on Monday, after closing at 6.5131% on Friday. Bond yields move inversely to prices.
Indian debt markets are shut on Tuesday and Wednesday for Diwali.
States aim to raise 170 billion rupees ($1.9 billion) through sale of bonds later in the day, with the quantum largely in line with schedule, after undershooting the calendar by a large margin last week.
“There is no scope for last week like rally in bonds this week, and we should see benchmark bond yield consolidating around 6.52%, while a break could see test of 6.55%-6.56% levels” trader with a private bank said.
Bond yields ended lower on a weekly basis last week, as the minutes of the Reserve Bank of India’s latest meeting reaffirmed bets of a rate cut in December as members of its interest-rate panel flagged room for future cuts as the country’s inflation outlook eases.
India’s retail inflation dropped to an eight-year low of 1.54% in September, and HDFC Bank anticipates the reading at a record low of 0.5% in October, bolstering calls for a rate cut in December.
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