Mumbai, January 27 (Reuters) – The Indian government’s bond yields declined at the beginning of the busy week and it came to a 10 -year low, as the sudden bond procurement by the central bank promoted investors’ perception.
The benchmark yield ended at 6.6800%, the lowest for the 10-year bond yield since February 18, 2022, while the previous closing was 6.7206%.
Alok Sharma, head of Treasury at ICBC, said that with the hand of the Reserve Bank of India in bond procurement before last week, the yield would reach 6.65% -6.68% area, which was seen during the December monetary policy announcement.
He said, “If the FOMC (Federal Open Market Committee) and the budget results are in line with the RBI’s favorable policy, then the 10 -year bond yield can go to the level of 6.50%.”
The Federal Reserve Policy decision is to come on Wednesday, followed by India’s federal budget on 1 February and the RBI policy decision on 7 February.
The RBI bought a bond of Rs 101.75 billion ($ 1.18 billion) in the secondary market in the second week ended January 17, this was its first such operation in three years, indicating its intention to maintain the liquidity position easier.
It coincides with daily fund infusions using overnight repo.
These operations have raised the possibility that the central bank may opt for the interest rate cut in February.
Meanwhile, the so -called ‘other’ category investors, including RBI, bought bonds of Rs 187 billion last week. How many of these were purchased by the RBI, if there is any, it will be known on 31 January.
Investors are eagerly waiting for the fiscal deficit and gross borrowing targets for the next financial year in the budget. Traders currently assess them from about 4.5% of the GDP and Rs 14.50 trillion respectively to Rs 14.50. ($ 1 = 86.3800 Indian rupees) (Reporting by Dharmaraj Dhutia; editing by Mrigank Dhaniwala)
