Indian government bonds hold firm as investors eye debt auction demand
India to raise ₹32,000 crore through bond sale later in the day, including two new securities that will mature in three years and seven years
Indian government bonds maintained their stability in early trading on Friday, with the benchmark 10-year bond yield hovering above the crucial 6.75 percent level, as investors awaited insights from the weekly debt auction. The yield on the benchmark 6.94 percent 2036 bond stood at 6.7511 percent at 10 a.m. IST, following its close at 6.7582 percent on Thursday. As bond yields and prices have an inverse relationship, the market movements were closely monitored.
New Delhi plans to raise ₹32,000 crores ($3.35 billion) through a bond sale later in the day, including two fresh securities maturing in three and seven years. A trader noted that while the market had shown bullish tendencies, the key concern remained whether there were sufficient buyers to push the 10-year bond yield beyond the 6.75 percent mark.
Oil prices decreased in the previous session and stabilized around similar levels in Asian trade on Friday. Traders considered the growing indications of reduced global demand alongside a substantial rise in US crude stockpiles. Brent crude prices fell below $87 a barrel after the U.S. Energy Information Administration revealed that commercial crude inventories experienced their biggest weekly increase since January 2023.
The decline in oil prices is advantageous for India, the world's third-largest crude oil importer, as lower import expenses could alleviate inflationary pressures and enhance the fiscal outlook.
US Treasury yields also experienced a slight decline, with the benchmark 10-year yield near 4.65 percent, following July producer-price data indicating that wholesale-level inflationary pressures were still under control. This allowed investors to reduce their expectations of rate hikes in September. India's overnight index swap rates fell, with no significant volumes suggesting a strong trend.
On Thursday, the one-year rate was at 6.24 percent, while the two-year rate was at 5.92 percent, and the liquid five-year rate was at 6.24 percent.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
