India bonds may take a breather after 3-day bull run

MUMBAI: Indian government bonds may consolidate in early deals on Thursday as traders will focus on fresh debt supply and the nation’s growth data due on Friday, after a three-session rally buoyed by rising bets of an interest rate cut next week.

The benchmark 10-year yield is likely to hover between 6.48% and 6.51%, according to a trader at a private bank.

It ended at 6.4934% on Wednesday, the lowest closing level since November 10. Bond yields move inversely to prices.

The 10-year benchmark bond yield has eased by 8 basis points so far this week, largely due to dovish commentary from Reserve Bank of India Governor Sanjay Malhotra.

On Monday, Malhotra in an interview with a local news outlet said that there is scope to cut policy rates further, and the latest macroeconomic data has not indicated any reduction in the room for policy easing.

The RBI will likely cut its key interest rate by 25 bps to 5.25% in its December 5 meeting, according to a majority of economists polled by Reuters, who also expect the rate to stay there through 2026.

The central bank has already slashed rates by 100 bps in January-June and has maintained status quo since then.

“As we are approaching the monetary policy decision, there is more certainty among market participants that there would be a rate cut next Friday, still the last trigger in terms of growth data remains crucial for further rally,” the trader said.

India’s July-September growth data is due on Friday.

The economy likely grew 7.3%, according to a Reuters poll, after expanding 7.8% in April-June.