MUMBAI: Indian government bonds fell on Monday to snap a four-session winning streak on profit-booking and after Finance Secretary Arvind Mayaram told a domestic news agency the country was not considering raising limits for foreign investors as of now.
Reuters had earlier reported that India was likely to raise the foreign investment limit in government debt soon, citing four officials with direct knowledge of the government's thinking.
The Reuters report had initially sent the benchmark 10-year bond yield to a session low of 8.49 percent, but the yield hit the day's high of 8.57 after Mayaram's comment to Cogencis.
Investors are expected to focus next on consumer price inflation data for May due out on Thursday.
"Investors are taking a breather and booking profits because there is slew of data in the week ahead, and unless we see data showing inflation softening, yields will remain around here," said Debendra Dash, a fixed income dealer with DCB Bank.
The benchmark 10-year bond yield ended up 4 basis points at 8.55 percent after hitting an over four-month low of 8.49 percent on Friday.
Foreign investors have been strong buyers of Indian equities and debt, amid widespread expectation of reforms picking up pace in India under the new government.
As of Friday, data showed foreign investors have exhausted 89 percent of the total investment limit into government debt.
But Finance Secretary Arvind Mayaram was quoted by news agency Cogencis as saying the government had no plans as of now to raise investment for overseas investors in government debt.
Why would we hike the limit just because they have reached the limit ... The limits are set because of due considerations. At the moment there is no thought in changing the limits," Mayaram was quoted as telling Cogencis.
Traders cited little impact from President Pranab Mukherjee's speech in Parliament where he laid out the reform agenda of the new government, which was largely in line with market expectation.
Later, Finance Minister Arun Jaitley said in a pre-budget meeting that India's economic growth cannot be compromised at any cost, adding the government must also contain inflation and concentrate on fiscal consolidation.
The benchmark five-year swap rate ended up 5 bps to 7.78 percent versus its close of 7.73 percent on Friday.
The one-year rate ended up 6 bps at 8.20 percent, versus its previous close of 8.14 percent.
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