MUMBAI: Indian government bond yields were largely flattish in early trade on Tuesday, with benchmark bond yield sticking to the 7.35% handle as traders looked for strong market-moving cues and will eye demand at the state debt auction.
The 10-year benchmark bond yield was at 7.3606% as of 10:00 a.m. IST, after ending at 7.3701% in the previous session.
Indian states aim to raise 254 billion rupees ($3.05 billion) through the sale of bonds maturing in seven years to 30 years later in the day.
The quantum is higher than the 156 billion rupees noted in the auction calendar.
“There is absolutely no trigger for traders to take large positions, and like yesterday, we may see another shallow trading session today, with any major move expected after the Federal Reserve policy decision,” a trader with a primary dealership said.
Indian benchmark bond yield has traded in a narrow 7.31%-7.39% range over the last 10 trading sessions as traders are on the edge, awaiting bond sales by the Reserve Bank of India (RBI).
India bond yields flattish as traders eye cues on RBI debt sales
Earlier this month, RBI Governor Shaktikanta Das said the central bank aims to sell bonds via auctions to manage liquidity in the banking system.
While the market expects around 500 billion rupees of such sales this quarter, investors are unsure about when the sales will begin, especially as the RBI has stepped up bond sales via screen-based trades.
Traders will eye any cues from the central bank as it is likely to meet select banks later this week, with a discussion about liquidity on the agenda.
Meanwhile, the 10-year US Treasury yield was around 4.90%.
The Fed is expected to keep rates unchanged, but commentary from Chair Jerome Powell will be critical for further moves.
The Fed has hiked rates by 525 basis points since March 2022, with some traders eyeing the probability of another hike in December.
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