MUMBAI: Indian government bond yields were lower on Tuesday amid value buying from long-term investors, even as the broader focus stayed on the first weekly auction of state debt due later in the day.

The benchmark 10-year yield was at 7.3211% as of 10:00 a.m. IST, after ending at 7.3398% on Monday — its highest since Nov. 10.

Long-term players like insurance companies and pension funds have received inflows, a trader with a private bank said, adding that with a lack of any major supply at the start of the new year, some of that money was flowing into longer-duration government bonds.

Many market participants also feel that the level of 7.35%-7.37% for the benchmark bond may not be broken on the upside in immediate future, and hence entering at these levels would be beneficial, traders said.

Traders are also waiting for the first state debt sale of the year, wherein states plan to raise 134.96 billion rupees ($1.63 billion).

This is a part of their planned borrowing of 3.41 trillion rupees for the current quarter, which is sharply higher than market expectations of 2.70 trillion rupees to 3.00 trillion rupees.

The larger state borrowing programme comes as market participants keenly await the federal budget announcement to gauge the borrowing plan for the next financial year.

Indian bond yields rise on elevated Jan-March state debt sale plan

The benchmark bond yield has stayed above the 7.30% mark for the last few days, amid a lack of active interest from traders as well as investors.

The benchmark bond yield is expected to remain in the range of 7.30%-7.40%% in the current month, Dipanwita Mazumdar, an economist with Bank of Baroda, said.

The 10-year US yield continued to stay around 3.85%, while the benchmark Brent crude contract was around $85 per barrel.