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India Bond Yields Little Changed, RBI Special OMO Result Awaited

Thursday,   19-Nov-2020   01:52 PM (IST)

Indian sovereign bond yields remained largely unchanged in the afternoon session, as investors awaited the result of the central bank’s so-called special open market operation. The benchmark 5.77% bond maturing in 2030 changed hands at 99.18 rupees, yielding 5.88% at 1:00 p.m. in Mumbai, against 99.19 rupees yielding 5.88% yesterday. The Indian rupee was at 74.28 to the dollar, against 74.20 yesterday. The Reserve Bank of India aims to purchase bonds worth 100 billion rupees maturing in 2025, 2027 and 2030 and simultaneously sell Treasury Bills worth the same amount maturing in April and May 2021 today. It had conducted an auction of the same quantum of OMO last week. Bond market traders anticipate banks to offer the 2030 note at sharply-higher-than-prevailing yields. A NewsRise poll pegs the cutoff yield at 6.08%. Market participants are relying on the central bank’s constant assurances that it would help absorb a record government borrowing totalling 13.10 trillion rupees for this fiscal year. It aims to sell debt worth at least 220 billion rupees tomorrow. Meanwhile, Moody’s Investors Service today raised India’s gross domestic product forecasts and said the latest fiscal stimulus measures that seek to boost manufacturing, create jobs and support infrastructure investments are credit positive. The global ratings agency raised India’s economic growth projection for the next fiscal year ending Mar. 31 2022 to 10.8% from its previous estimate of 10.6%. It expects the economy to contract 10.6% this fiscal year as against the 11.5% contraction expected earlier. The Indian economy contracted by a record 23.9% in April-June, and the RBI expects it to shrink by 9.5% in this fiscal year amid weakened economic activities due to the Covid-19 pandemic. India remains the second-worst impacted nation from the coronavirus after the U.S., with total reported cases at 8.96 million, which includes 131,578 fatalities. The benchmark Brent crude oil contract was 0.3% higher at $44.45 per barrel. India imports nearly 85% of its crude oil requirements.