Indian bonds rise after strong buying sparks RBI participation bets

MUMBAI: Indian government bonds rose in early deals on Wednesday after strong purchases from the “others” investor category fuelled expectations that the central bank may have been among the buyers.

The benchmark 6.48% 2035 bond yield was at 6.6726% as of 10:05 a.m. IST, after ending at 6.6812% on Tuesday.

The yield has fallen 4 basis points in the last two days. Bond yields move inversely to prices.

Investors in the so-called “others category” net bought bonds worth 74.84 billion rupees ($823.12 million) on Tuesday, the biggest single-session purchase since June 2023, according to data from the clearing house.

The category includes insurers, pension funds, provident funds, corporates, and the Reserve Bank of India.

Official RBI data for its activity in the debt market for the week is due on March 6, but sustained purchases from this category could trigger another round of rally in prices.

“If we have a decently large buying figure today as well, we could see the auction of the 10-year paper going through easily at around 6.65% levels,” a trader with a state-run bank said.

New Delhi will sell the 10-year benchmark 2035 bond for 320 billion rupees on Friday, the note’s last sale for the financial year.

The central bank has had a record year of liquidity infusion and debt purchases, and any RBI participation in Tuesday’s buying would further boost liquidity.

The central bank has bought 6.83 trillion rupees of bonds and, along with a cut in cash reserve ratio and FX swaps, has injected around 11.5 trillion rupees of liquidity so far this financial year.