MUMBAI: Indian government bond yields were largely unchanged on Tuesday, as traders waited for fresh supply of debt from states due later in the day. The 10-year benchmark 7.26% 2032 bond yield was at 7.3783% as of 10:00 a.m. IST, after closing lower at 7.3726% on Monday.
“There are no major triggers, and after Friday’s devolvement, the market is adequately positioned,” a trader with a state-run bank said. “State debt cutoffs could provide some direction.”
Indian states aim to raise 207.37 billion rupees ($2.51 billion) through the sale of bonds maturing in 7 years to 29 years.
The quantum is lower than scheduled but stays above 200 billion rupees for the fourth time in the last five weekly auctions.
Ashutosh Tikekar, the head of global markets at BNP Paribas India, said he does not expect the benchmark bond yield to move sharply from the current levels, staying within the 7.25% - 7.50% levels despite inflation worries.
Retail inflation in January surprised on the upside, with the reading at 6.52% rising above the Reserve Bank of India’s upper tolerance range for the first time since October, further cementing bets that the central bank could hike the rate to 6.75% in April.
Traders also await the minutes of the RBI’s latest monetary policy, which would be published on Wednesday and provide more clarity on views of the members that could shape up interest rate trajectory.
Indian bond yields seen opening steady as traders eye fresh triggers
The RBI has raised the policy rate for the sixth consecutive time to 6.50%, and kept the door open for more tightening, highlighting core inflation concerns.
Market participants will also track the movement in the US yields and oil prices for more triggers. The 10-year US yield was at 3.86%, ahead of the release of the minutes of Federal Reserve’s latest meeting, due on Thursday.
The benchmark Brent crude futures were 0.6% higher at $83.60 per barrel, after rising 1.3% in the previous session.
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