MUMBAI: Indian government bond yields were up after dropping in the early part of the session on Tuesday, with traders booking profit as the benchmark yield hit its lowest level in a year on persistent bullish sentiment.
The 10-year benchmark 7.26% 2033 bond yield was at 7.1169% as of 10:00 a.m. IST, after ending at 7.0977% in the previous session. Earlier in the day, it had dipped to 7.0742%, the lowest level since April 27, 2022.
Momentum was being carried over on Tuesday as well, but since yields are near crucial levels, buyers’ appetite has been tested, and there is some reversal in one-way trading, a trader with a private bank said.
Bond yields have been falling since Friday after stronger-than-anticipated demand at the auction triggered a sharp drop in yields in the secondary market.
Traders said yields were also down because global and domestic monetary policy pivots supported sentiment.
Strong demand, especially from foreign banks, has aided as they have bought bonds worth 135 billion rupees ($1.65 billion) on a net basis in the last five sessions, data from Clearing Corp of India showed.
The Reserve Bank of India (RBI) maintained a status quo on its policy rate earlier this month, and easing inflation has cemented bets that there would be a prolonged pause, despite a hawkish tilt in the minutes of the policy.
India’s March retail inflation dropped to 5.66% and is set to ease below 5% in April.
India’s 10-year bond yield ends at 1-year low on policy pivot bets
Meanwhile, market participants expect the US Federal Reserve to also maintain a pause on rates after hiking them one last time on May 3.
The 10-year US yield eased below the 3.50%-mark.
New Delhi will sell bonds worth 310 billion rupees on Friday, while states aim to raise 60 billion rupees via bond sale later in the day.
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