Bond yields at 2-week high before debt sale

India’s benchmark bonds fell for a third day, the longest stretch in almost a month, before the government auctions Rs 10,000 crore ($2.15 billion) of debt later this week.

Yields on the most-traded securities due 2019 rose to the highest level in more than two weeks as India prepares to sell bonds maturing in 2016, 2019 and 2032 on December 4.

“Sentiment is weak and some portfolio adjustments are happening before the auction,” said Mukesh Kumar, a fixed- income trader at government-owned State Bank of Bikaner & Jaipur in Mumbai.

The yield on the 6.9 per cent note due July 2019 rose seven basis points, or 0.07 percentage point, to 7.33 per cent at the 5:30 pm close in Mumbai, according to the central bank’s trading system. The price fell 0.50 per cent, or 50 paise per Rs 100 face amount, to Rs 97.05. The benchmark yield may move in a range of 7.25 per cent to 7.35 per cent this month, Kumar forecasts.

The Reserve Bank of India may withdraw more stimulus measures by the end of the year after Asia’s third-biggest economy grew at the fastest pace in six quarters. Governor Duvvuri Subbarao, concerned about inflation gaining traction, last week indicated that there was a need to exit some of the “unconventional” measures used to spur growth.