MUMBAI: Indian government bond yields stayed in a narrow range in early deals on Wednesday, but traders anticipate an upside bias to persist through the day, tracking the rise in US Treasury yields, which could lead to some selling pressure.
The yield on the new benchmark 10-year bond was at 6.2326% as of 9:45 a.m. IST, compared with the previous close of 6.2228%.
The 2034 bond yield was at 6.2776% after ending at 6.2652% on Tuesday.
“We should largely see sideway moves today, unless there is a fresh selloff in Treasuries during Indian market hours,” a trader with a primary dealership said.
US Treasury yields rose overnight, led by long end on concerns that a tax-cut bill being debated in Congress will worsen the US budget deficit at a faster pace than previously expected.
The 10-year yield was at 4.51% in Asian hours on Wednesday, and is up around 33 basis points so far in May.
Foreign banks sold Indian government bonds for eight consecutive sessions through Tuesday, aggregating 322 billion rupees ($3.8 billion), according to clearing house data.
Indian bond yields seen moving with an upside bias
Traders say the spike in Treasury yields is one of the triggers for the hefty sales.
The Reserve Bank of India’s dividend transfer to the government for the previous financial year remains in focus this week.
Economists expect the central bank will transfer a record surplus, with Citi estimating it in a range of 3.5 trillion rupees to 4 trillion rupees, sharply higher than the 2.1 trillion rupees surplus last year.
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