Indian bond yields dip as RBI cuts debt sale, govt announces second buyback

Indian government bond yields declined in the early trade on Monday after the central bank trimmed its debt sales and announced a second debt buyback in two weeks.
 

The benchmark 10-year bond yield was at 6.7735 per cent as of 10:00 a.m. IST, compared with its previous close of 6.7914 per cent.
 

"Multiple factors from the domestic side are helping, and we could see the benchmark bond yield settling around the 6.75 per cent mark for the day, with the focus sifting to inflation data after that," a trader with a primary dealership said.
 

The Reserve Bank of India net sold bonds worth only Rs 20 crore ($2.38 million) in the week ended Oct. 4, after not selling debt for the week ended Sept. 27.
 

Prior to that, the RBI had sold bonds from its portfolio for 11 consecutive weeks, posting its longest such streak since January 2022. The central bank sold bonds worth over Rs 24,000 crore in the 11 weeks to Sept. 20.
 

New Delhi will buyback bonds worth Rs 25,000 crore on Thursday, after a similar auction last week, where it bought back papers worth around Rs 24,000 crore.
 

India will release retail inflation data for September after market hours. A Reuters poll pegs the reading at 5.04 per cent versus 3.65 per cent in August.
 

Sentiment was also buoyed by India's inclusion in FTSE Russell's emerging market debt index and the RBI's policy stance change to neutral last week.
 

The benchmark bond yield may drop to 6.30 per cent by March end, on strong foreign inflows and rate cuts from the central bank, said Jean Charles Sambor, head of emerging markets debt at TT International Asset Management.

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