India bonds dip before debt sale; GDP data to guide rate-cut bets

MUMBAI: Indian government bonds declined in early deals on Friday, extending losses from the previous session, as traders awaited a weekly auction, followed by economic growth data for the latest quarter.

The benchmark 10-year yield was at 6.5173% as of 10:00 a.m. IST, after ending at 6.5082% on Thursday. Bond yields move inversely to prices.

India’s economy is expected to have grown 7.3% year-on-year in July-September, according to a Reuters poll, after expanding 7.8% in the previous quarter.

The data is due at 4:00 p.m. IST.

The Reserve Bank of India will likely cut its key interest rate by 25 basis points in its December 5 decision, according to a majority of economists polled, who also expect the rate to stay there through 2026. Bond yields eased recently after RBI Governor Sanjay Malhotra said that there is scope to cut policy rates further.

The RBI slashed the repo rate by 100 basis points in January-June and has maintained status quo since then.

New Delhi is selling bonds worth 320 billion rupees ($3.58 billion) later in the day, including a seven-year paper.

At its previous auction on October 31, the central bank had rejected all bids for this note due to weak demand.

“Market mood would be reflected in the auction cutoffs today, and if there is aggressive demand, some rally could follow,” a trader with a state-run bank said.