MUMBAI: Indian federal bond yields inched down on Wednesday aided by a fall in global oil prices, while traders preferred to be on the sidelines ahead of the key August inflation data, due around noon.
The 10-year benchmark bond yield was at 8.32 percent, down 1 basis point from Tuesday's close.
Total volume on the central bank's electronic trading platform was a low 19.15 billion rupees ($383 million), compared with of 35-45 billion rupees usually traded in the first 2.5 hours of the trade.
Oil fell on Wednesday, pulling US crude off six-week highs, as investors saw little upside from declining inventories in an environment where anxiety over the euro zone debacle is taking precedence over tightening supply.
The Benchmark US 10-year notes were at 1.96 percent in Asia, compared with 1.99 percent on late New York close Tuesday.
"It (benchmark local bond yield) should be rangebound. I don't see any big movements before the inflation data," a senior trader with a state-run bank said.
"The yields are likely to ease if inflation is around 9.6 percent, but could go up if the data comes in around 10 percent," he said.
The wholesale price index likely rose an annual 9.6 percent in August on rising food and fuel prices, a Reuters poll showed. The data is due around 0630 GMT.
Traders are awaiting the inflation data to get a clearer perspective on the Reserve Bank of India's (RBI) policy stance.
India's industrial output growth slumped to 3.3 percent in July, its weakest annual pace in nearly two years, reinforcing expectations the central bank will pause its monetary policy tightening after one more rate rise on Friday.
The benchmark five-year overnight indexed swap rate was at 6.70, down 3 basis points from its previous close, while the one-year rate was at 7.60 percent from 7.64 percent.
Copyright Reuters, 2011
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