MUMBAI, Nov 25 (Reuters) – Yields on Indian government bonds were broadly flat at the start of Friday’s session and are expected to trade in a tight range as market participants wait for fresh debt via a weekly auction .
New Delhi plans to raise 280 billion rupees through bond sales later today.
The yield on benchmark 10-year Indian government bonds was 7.2551% at 0436 GMT, after closing lower at 7.2548% on Thursday.
Yields opened largely unchanged and fell just below the 7.25% mark on buying support from long-term investors, a public bank Treasury official said.
Yields are unlikely to hold below this mark as there will be no significant buying on auction day, they added.
There is a general feeling that the amount of rate hikes by the US Federal Reserve and the Reserve Bank of India (RBI) is going to be smaller, so the sentiment is bullish, putting downward pressure on yields, said a trader from a private bank.
Yields ended lower on Thursday after minutes from the Fed’s November meeting signaled a slower pace of rate hikes going forward.
After the release of the minutes, domestic traders are of the opinion that the RBI will also slow down its rate hike pace. The central bank’s monetary policy committee is due to meet Dec. 5-7.
Until then, the market will follow US Treasury yields and oil prices and there are unlikely to be any nasty surprises, a debt fund manager said. “I see benchmark yields moving in the 7.20% to 7.35% band until RBI policy.”
The US Treasury market was closed on Thursday for the Thanksgiving holiday. Benchmark Brent oil prices fell slightly as the level of a G7-proposed cap on the price of Russian oil raised doubts about the extent of the supply limit. (Reporting by Bhakti Tambe; Editing by Savio D’Souza)