MUMBAI: Indian government bonds rose for a third straight session on Friday, helped by a fall in US treasury yields and a successful auction of 160 billion rupees ($2.65 billion) worth of debt despite tight cash conditions.
The benchmark 10-year bond yield fell 7 basis points on the week, its third weekly fall in four, helped by relief over cash conditions thanks to the Reserve Bank of India's decision to infuse cash via 750 billion rupees worth of term repos on Friday.
That helped pull off a successful auction of debt on Friday, with cut-offs slightly better-than-expected.
The US nonfarm payrolls data due to be released after market hours will provide opening cues for markets on Monday, although the impact may be short-lived ahead of the outcome of the ongoing national elections in mid-May.
"Yields have more or less reached a level where there is very little scope for them to come down further," said Anoop Verma, senior vice president at DCB Bank.
"Most important now is the election outcome. Market is poised for a stable government and if that happens then it should be positive for overall markets. Until then I see the 10-year in a broad 8.75-9 percent range," he added.
The benchmark 10-year bond yield closed down 2 basis points at 8.81 percent after moving in a range of 8.79 to 8.82 percent during the session.
Traders said falls in US yields overnight also helped sentiment for bonds.
US Treasury debt prices advanced on Thursday, pushing yields on long-dated bonds to multi-month lows, in a market that continued to cover short positions ahead of Friday's all-important US nonfarm payrolls data.
Traders cited little impact after data earlier showed the HSBC Market Manufacturing Purchasing Manager's Index held steady at 51.3 in April, identical with the March level.
In the overnight indexed swap market, the benchmark five-year swap rate closed down 3 basis points at 8.33 percent, while the one-year rate ended steady at 8.58 percent.
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