MUMBAI: Indian government bond yields were largely unchanged early on Tuesday, as traders avoided positions ahead of a heavy state debt supply later in the day, followed by more auctions this week.

The benchmark 10-year yield was at 7.3604% as of 9:55 a.m IST, after ending at 7.3515% on Monday.

“We are seeing such a heavy quantum from states after a long gap and it would be interesting to see if all states are able to garner money, at a time when caution has gripped the market,” a trader with a primary dealership said.

Debt supply worth 636.50 billion rupees ($7.80 billion) is scheduled to hit the market over the next three trading sessions, barring the shorter maturity Treasury Bills.

Indian states aim to raise 256.50 billion rupees through the sale of bonds later in the day. Even though the amount is lower than scheduled, it is at the highest level in the last three months.

Indian bond yields start week higher as debt supply galore

New Delhi also plans to raise 80 billion rupees via five-year and 10-year green bonds on Wednesday, which would be the first-ever such fundraising from the Centre.

The central government will raise another 300 billion rupees via debt sale on Friday, which includes the liquid 14-year bond. Indian markets will be closed on Thursday.

Major focus also remains on the Feb. 1 Union budget, with the government’s fiscal consolidation path and its borrowing calendar for fiscal 2024 set to be the next market-moving trigger.

The government will borrow a record 16 trillion rupees in the fiscal year ended March 2024, according to a Reuters poll of economists, who said infrastructure spending and fiscal discipline ought to be its highest priorities.

The budget will be the last full-fledged one before the national elections in 2024. Constant uptick in oil prices is also adding to caution.

The benchmark Brent crude contract is now nearing $90 per barrel, on prospects of an improvement in demand from the world’s largest importer China. India is one the largest importers of the commodity and rising oil prices can mar inflation outlook.