MUMBAI: Indian government bonds dipped in early trading on Friday, as investors remained wary ahead of the weekly debt sale that will test demand in the wake of a disappointing central bank policy decision.
The yield on the benchmark 10-year bond was at 6.3949%, as of 10:20 a.m. IST, while it closed at 6.3861% on Thursday.
Bond yields move inversely to prices.
New Delhi is set to raise 250 billion rupees ($2.86 billion)through the sale of seven-year and 50-year bonds in the debt auction later in the day.
The RBI’s decision to hold rates and a lack of dovish cues in the Governor’s statement had pared rate easing bets. It has curbed investor appetite for debt, traders said, adding that demand for auction will be key for determining direction of bond yields.
“The uncertainties appear to have increased for bonds,” said Sandeep Bagla, CEO at Trust Mutual Fund.
“With core inflation stubbornly high and headline inflation projected at 4.9% after a few months, there seems to be little room for an immediate rally.”
Market participants are now awaiting next quarter’s GDP data by August-end for cues on the RBI’s policy easing trajectory.
U.S. President Donald Trump’s 50% tariffs on Indian imports could hurt India’s growth prospects as it would curtail India’s ambitions to develop its manufacturing sector and hurt its garment makers.
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