MUMBAI: Indian government bond yields were marginally higher in the early session on Monday, tracking similar moves in US yields and oil prices.
The benchmark 10-year bond yield was at 7.2827% as of 10:05 a.m. IST after ending higher at 7.2768% on Friday.
The yields are expected to move in a narrow range later in the day in the absence of fresh cues.
“There’s no trigger point for the market. Everything has been factored in, right from the Fed policy stance to global and domestic inflation,” said Shrisha Acharya, a fixed income dealer at Mumbai-based DCB Bank.
As is the case usually in December, there will not be any major trading activity, added Acharya.
“Volumes will be low, so yields will remain in a range of 7.26%-7.35% for the rest of this month.”
The benchmark crude fell by more than $2 per barrel on Friday on fears of a looming recession, but gained in early trade on Monday as optimism from China’s reopening and oil demand recovery outweighed concerns.
The movement in oil prices has a direct impact on local inflation as India is one of the largest importers of the commodity.
The country’s annual retail inflation eased to 5.88% in November, coming within the Reserve Bank of India’s target range for the first time in 2022.
Indian bond yields rise marginally as traders await debt auction
Benchmark crude contract was up 1% at $79.86 per barrel, while the 10-year US Treasury yield was up 3 basis points at 3.5132%.
“As we are nearing the end of the calendar year and Oct-Dec quarter, traders will not add heavily to their portfolios and assess their positions,” said a treasury head at a state-run bank.
If there is selling pressure, yields will find support at 7.33% and 7.36% levels.
At the lower end, yields are unlikely to break below 7.25%, he added.
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