India bonds give up early gains, trade little changed

MUMBAI: Indian government bonds pared early morning gains and traded in a narrow range on Wednesday as investors awaited the upcoming borrowing calendar, while the broader focus remains on the central bank’s monetary policy decision next week.

The yield on the 10-year benchmark note was at 6.4715% as of 10:20 a.m. IST.

It closed at 6.4729% on Tuesday. Bond yields move inversely to prices.

India’s borrowing calendar for the fiscal second half is expected to be released in the next few days and will be a key trigger for the market as investors remain concerned that longer-term debt supply may exceed demand.

Additionally, traders await states’ quarterly borrowing calendar, which is slated for release at the end of the month, and may move the market.

“There was some early buying that continued from yesterday, but building aggressive longs is a risk at the current point of time where heavy events are lined up,” a trader at a private bank said. The borrowing plan will be followed by the Reserve Bank of India’s monetary policy decision on October 1.

Although most market participants do not expect a rate cut, some, including State Bank of India and Capital Economics, believe that the central bank may resume its easing cycle.

Meanwhile, New Delhi will sell 15-year and 40-year bonds worth 160 billion rupees ($1.80 billion) each on Friday, while the RBI will auction treasury bills worth 210 billion rupees later in the day.