MUMBAI: Indian government bond yields were largely unchanged in early deals on Monday after a sharp decline last week and as traders await a scheduled debt purchase from the domestic central bank.
The yield on the new benchmark bond maturing in 2035 was at 6.2205% as of 10:15 a.m. IST, compared with the previous close of 6.2233%.
The 2034 bond yield was at 6.2702% after ending at 6.2682% in the previous session.
“Most positives are now in the prices, and hence we are seeing some consolidation, and this should be the theme for this week,” a trader with a state-run bank said.
The Reserve Bank of India is scheduled to buy bonds worth 250 billion rupees ($2.92 billion) later in the day, which includes securities maturing from 2029 to 2036.
The RBI has already bought bonds worth one trillion rupees over the last two weeks, after having bought bonds worth 3.65 trillion rupees in January-April.
Bond yields plunged last week due to the RBI’s bond buying activities, along with a softer-than-expected retail inflation print for April, which remained below the central bank’s 4% target for the third consecutive month, opening up room for more interest rate cuts.
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Traders now await the quantum of RBI’s dividend payment to the government, which is expected to be announced later this month.
Economists expect the central bank to transfer a record surplus to the government this year, with Citi estimating the transfer in the range of 3.5 to 4 trillion rupees, sharply higher than 2.1 trillion rupees in the previous year.
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