MUMBAI: Indian government bond yields may open marginally higher on Tuesday, ahead of fresh supply of state debt later in the day, with lower volumes expected in a holiday-truncated week.

The benchmark Indian 10-year government bond yield is likely to be in a 7.49%-7.54% band, a trader with a private bank said. The yield had ended at 7.5121% on Friday.

It rose four basis points last week, after advancing an aggregate 30 bps in the previous five weeks.

Indian states aim to raise at least 272 billion Indian rupees ($3.29 billion) through sale of bonds maturing in three years to 29 years, with the total quantum slightly higher than 245 billion rupees scheduled previously.

“We may see some upward pressure on yields due to debt supply, and shallow volume could lead to some exaggerated moves,” the trader said.

Indian markets were shut on Monday and will remain closed on Wednesday due to local holidays, which may lead to lower-than-average trading volumes.

Still, lack of supply from central government could limit any major increase in yields, and the benchmark bond may face strong resistance around 7.55% levels. Focus will also remain on global factors such as US yields and oil prices.

Indian bond yields jump tracking US peers, rupee’s slide weighs

The 10-year US yield was largely steady around 4.20% and has risen for 12 consecutive weeks to Oct. 21, as market braces for more aggressive rate hikes from the Federal Reserve.

The Fed has already raised rates by 300 basis points since March and is expected to hike rates by 75 bps in each of its next two meetings.

Traders fear that aggressive hikes may put pressure on the Reserve Bank of India to follow suit.

Intraday, investors will also remain watchful of the rupee after it hit a fresh record low last week.