MUMBAI: Indian federal bond yields ended flat on Wednesday with investors on the sidelines a day ahead of the announcement of the government's borrowing calendar for the second half of the fiscal year ending in March.
The government will meet central bank officials at around 3 p.m. (0930 GMT) on Thursday, having already set a target to raise 2 trillion rupees ($37.41 billion) in October-December, as part of plans to borrow 5.7 trillion rupees for the full fiscal year.
However, analysts widely expect India to borrow more, with a Reuters poll expecting an additional 500 billion rupees for the year ending in March, although the government may not announce the need to increase borrowing until later this year.
The borrowing plans are being seen as a key measure of the country's fiscal discipline as India still faces sovereign ratings downgrades despite a recent slew of measures.
"I do not expect them to announce extra borrowing tomorrow. The most likely timing of extra borrowing announcement is December," said Vivek Rajpal, India's rates strategist at Nomura in Mumbai.
"I expect a brief relief rally if there is no extra borrowing," he added, but said bond yields would rise by 5-10 basis points if the government increases its borrowing targets this week.
The benchmark 10-year bond yield closed steady at its previous close of 8.17 percent.
Total volumes on the central bank's electronic trading platform were at a l owly 153.2 billion rupees ($2.9 billion).
Investors are also closely expected to monitor liquidity conditions. Month-end government spending is expected to flow in during the first week of October, pushing OIS rates further down.
The benchmark 5-year OIS rate edged down 1 basis point to 7.12 percent, while the 1-year OIS rate dropped 3 bps to 7.67 percent.
($1 = 53.4550 Indian rupees)
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