MUMBAI: Indian government bond yields are expected to move down in early deals on Wednesday as the central bank announced an unexpected bond purchase for the last week of the financial year.
The benchmark 10-year bond yield is likely to move between 6.65% and 6.70%, a trader with a private bank said, compared with its previous close of 6.6714%.
“The market was not expecting another open market operation, and we should definitely see some downward move in yields at least in the opening trades,” the trader said.
“Strong demand for the state debt sale yesterday had already lifted sentiment, with the 10-year bond yield ending below the key level of 6.68%.”
The Reserve Bank of India will buy bonds worth 500 billion rupees ($5.5 billion) on March 25, it said after market hours on Tuesday. India’s financial year runs April through March.
Indian bond yields seen little changed before state debt sale, RBI debt buy
The central bank has bought bonds worth one trillion rupees over the last four trading sessions.
The Reserve Bank of India has bought 2 trillion rupees via bond purchase auctions and another 388 billion rupees through secondary market purchases since the middle of January.
Indian states sold more than 526 billion rupees of bonds on Tuesday at sharply lower-than-expected yields despite the supply being the highest in a year.
Market participants now await the Federal Reserve’s policy decision due after market hours on Wednesday.
The Fed is expected to keep interest rates unchanged, but the focus would be on its guidance and updated dot plot.
Interest rate futures are pricing in around 58 basis points of rate cuts from the Fed in 2025, down from more than 75 bps last week, after stronger-than-expected economic data.
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