MUMBAI: Indian government bond prices were off opening lows on Monday as bets of further monetary policy easing offset the impact of a lower than expected central bank surplus transfer to the government.
The yield on the new benchmark 10-year bond was at 6.2124% as of 10:00 a.m. IST, compared with the previous close of 6.2107%.
The 2034 bond yield was at 6.2553% after settling at 6.2520% on Friday. Yields on these bonds rose to 6.2270% and 6.2812%, respectively, in opening deals. Bond yields move inversely to prices.
The Reserve Bank of India’s board approved the transfer of 2.69 trillion rupees ($31.6 billion) as surplus to the federal government for the fiscal year ended March, up from 2.11 trillion rupees in the previous year, it said on Friday.
Market participants had expected the amount to cross 3 trillion rupees.
Bond bulls buy into market despite rise in yields and heavy debt supply
“The figure is lower than what market had wanted, but will not change the medium-term market view, which is guided by the central bank’s liquidity injection and rate cuts of at least 50 basis points more in the coming months,” a trader with a state-run bank said.
Investors await India’s GDP data on Friday, followed by the central bank’s policy decision on June 6, where a third consecutive rate cut is widely expected.
India’s economy likely grew 6.7% in January–March, up from 6.2% in the previous quarter, according to a Reuters poll.