MUMBAI: Indian bonds ended flat on Monday despite data showing sharply easing retail and wholesale inflation, as investors took profits after benchmark 10-year bond yields had hit a nearly 1-1/2 year low.
Data earlier showed India's wholesale price index showed no increase in November, while data late on Friday had showed consumer inflation easing to its lowest since the series was unveiled in 2012.
The numbers cemented expectations the Reserve Bank of India would cut interest rates at its next policy review in February, although the impact on Monday was smaller since bonds have already rallied for nearly three weeks.
Traders also said large selling by a company contributed to the broader losses on Monday.
"WPI data was a pleasant surprise but the rate cuts have been already priced in by markets," said Killol Pandya, senior fund manager, debt at LIC Nomura MF Asset Management.
"It is a healthy correction, the sentiment for bonds remains positive. Expect bonds to trade between 7.80-7.90 percent in the short-term."
The benchmark 10-year bond yield ended flat at 7.83 percent. The yield had earlier fallen to as low as 7.78 percent, its lowest since July 15, 2013.
A large conglomerate likely sold about 20 billion rupees ($317.6 million) of bonds, hitting sentiment even as Brent crude oil hit a fresh five-year low close to $60 a barrel on Monday.
In the overnight indexed swap market, the benchmark 5-year rate ended 2 bps higher at 7.12 percent. The 1-year rate gained 3 bps to 7.76 percent.
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