MUMBAI: Indian government bond yields rose on Friday after weaker-than-expected demand at the weekly debt auction, with the benchmark yield gaining this week on profit booking and the rise in US yields.
The benchmark 7.26% 2033 bond settled at 7.2704%, after ending the previous session at 7.2561%.
The yield rose five basis points (bps) this week, after easing 8 bps last week. Indian markets will remain closed on Monday for a local holiday. New Delhi raised 300 billion rupees through the sale of bonds earlier in the day.
The demand for the liquid 14-year paper turned out to be weaker than expected and the higher cutoff pushed the benchmark bond yield higher.
“Broadly, there have been no major triggers for the market. Bond yields have been largely tracking US yields and oil prices,” said Ajay Manglunia, managing director and head of the investment grade group at JM Financial.
“This will continue till the Reserve Bank of India’s (RBI) policy in December.”
US yields rose in Asian trading hours on Friday, with the benchmark rising to 4.4707%.
US yields eased in the past few sessions on expectations that the Federal Reserve was done with its rate hikes.
Oil prices were steady on Friday as traders kept their powder dry ahead of an OPEC+ meeting that could bring agreement on further supply cuts.
The OPEC+ had postponed a ministerial meeting after producers struggled to reach consensus on production levels.
Domestic bond traders also await a decision on the inclusion of Indian bonds in the Bloomberg Global Aggregate after JPMorgan added the notes to its emerging market index in September.
“The market is divided on whether the inclusion will happen or not but if there’s some positive news, the benchmark yield will fall 5-7 bps,” Manglunia added.