Indian federal bond yields ended higher on Friday as industrial output data topped forecasts and strengthened the case for further policy tightening with traders awaiting Tuesday's inflation data for more cues. India's financial markets will remain shut on Monday for an Independence Day holiday.
The 10-year benchmark bond yield ended at 8.30 percent, up 9 basis points on the day after trading in the range of 8.23-8.31 percent. Volumes were a heavy 103.80 billion rupees ($2.2 billion) on the central bank's trading platform. The yield on the 10-year bond is up 15 basis points from a 3-month low of 8.15 percent touched on Tuesday but still down 18 basis points from a 3-year high of 8.48 percent touched after the hefty rate increase by the central bank in end-July.
India's wholesale price index likely rose an annual 9.20 percent in July, slightly slower than June's 9.44 percent, as food prices likely continued to surge despite policy tightening by the Reserve Bank of India (RBI), a Reuters poll showed. Data is due on Tuesday at 0630 GMT. India's central bank chief said on Friday it was important to bring down inflation and inflationary expectations to sustain growth, and that it was too early to change the policy stance following global developments.
India's industrial output expanded above forecasts in June helped by strong capital goods production, confirming resilience in Asia's third-largest economy and supporting the case for the central bank to persist with its battle against high inflation. The benchmark five-year rate ended at 6.83 percent, up 7 basis points on the day. The one-year rate closed 20 basis points higher on the day at 7.68 percent.