MUMBAI: Indian government bond yields are expected to continue their uptrend in opening deals on Friday, ahead of the weekly debt auction, while concerns over a further spike in oil prices persist.
The yield on the benchmark 10-year bond is expected to move between 6.30% and 6.33%, till the debt auction, a trader at a private bank said, compared with the previous close of 6.3095%.
The five-year 6.75% 2029 bond ended at 6.0236% on Thursday.
New Delhi to sell bonds worth 270 billion rupees ($3.11 billion), which includes 150 billion rupees of the 2029 bond.
Indian bond yields marginally higher; focus on oil, debt supply
The yield on this paper has risen 20 basis points in the last two weeks.
“We should see the continuation of yesterday, as for the time being yields are heading only one way because people are worried about escalation of geopolitical tensions and its impact on oil,” the trader said.
“Cutoff at the debt auction would provide a better idea about investor appetite.”
Oil prices rose on Thursday, with the benchmark Brent crude hitting $79 per barrel as the conflict between Israel and Iran escalated, while uncertainty about potential US involvement kept investors on edge.
India imports a bulk of its crude oil needs and higher prices could impact the nation’s inflation outlook. Earlier this month, the Reserve Bank of India reduced its inflation forecast for the current year to 3.7%, while cutting its key lending rate by a steeper-than-expected 50 basis points.
It, however, reverted to a “neutral” stance from “accommodative”, prompting analysts to forecast the end of the easing cycle. The minutes of RBI’s latest meeting are due after market hours.
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