MUMBAI: Indian government bond yields were little changed, with the benchmark bond yield persisting below the 7% mark, as underlying sentiment stays supported, but traders looked for more positive triggers for a further decline.
The benchmark 10-year yield was at 6.9737% as of 10:00 a.m. IST, following its previous close of 6.9780%.
“All positives are largely factored in and we could, at best, see another basis point or two moves downwards, but after that, we would need strong fresh factors for a sustainable move,” traders with a private bank said.
Bond yields have eased over the last few sessions, after the Reserve Bank of India’s board last week approved the transfer of a record 2.11 trillion rupees ($25.39 billion) as surplus to the government for the financial year that ended March 2024.
(USN) Market participants believe the government’s fiscal position will strengthen after a better-than-estimated dividend transfer and could result in a further supply cut in the coming months.
New Delhi aims to buy back bonds worth 400 billion rupees on Thursday, in what would be its fourth such attempt in May.
It has bought around 179 billion rupees of notes maturing in this financial year, against a target of 1.6 trillion rupees.
The central government has also cut the supply of Treasury bills by 600 billion rupees till the end of June as it sits on surplus cash, with limited ability to spend until the formation of the new government.
Indian bond yields seen flattish at start of new week
Sources said any decision on lowering the fiscal deficit and market borrowings will be taken after a new government is in place, with the general election results due next week.
Meanwhile, nine states will raise 212 billion rupees through the sale of bonds later in the day, and even though the quantum is lower than scheduled, it is the highest for the current financial year.
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