India Bond Yields Stay Little Changed, Traders Eye Auction Result

Friday,   20-Nov-2020   01:46 PM (IST)

Indian sovereign bond yields remained largely unchanged ahead of the outcome of today’s weekly debt sale. However, shorter tenor bond yields eased amid likely purchases by mutual fund houses, traders said. The benchmark 5.77% 2030 bond changed hands at 99.25 rupees, yielding 5.87% at 1:00 p.m. in Mumbai, against 99.21 rupees yielding 5.88% yesterday. The Indian rupee was at 74.13 to the dollar against 74.27 yesterday. New Delhi aims to raise 220 billion rupees via sale of bonds, and the central bank is likely to sell 90 billion rupees of the 2035 paper at 99.97 rupees cutoff price, yielding 6.22%, a NewsRise poll of nine dealers showed. The federal government has increased its annual market borrowing to 13.10 trillion rupees for this fiscal year amid weakened economic activities due to the coronavirus pandemic. The RBI bought 100 billion rupees of bonds under a special open market operation yesterday and will conduct another such auction on Nov. 26 worth the same amount. It has bought notes worth 871.32 billion through this route in this financial year. Asia’s third largest economy contracted by a record 23.9% in April-June, and is expected to shrink by 8.6% in the second quarter, according to the RBI. India’s reform agenda to counter the pandemic-led slowdown has the potential to raise the medium-term growth rate even as downside pressures persist, Fitch Ratings said today. Meanwhile, crude oil prices fell on concerns over fresh lockdowns in the U.S. due to rising coronavirus cases. The benchmark Brent crude oil contract was little changed at $44.22 per barrel. India imports nearly 85% of its crude oil requirements.