By Khushi Malhotra<\/p>\n
Indian government bonds surged on Tuesday after better\u2011than\u2011expected state auction demand shored up sentiment and sparked short\u2011covering, while some traders also suspected central bank buying in the secondary market. <\/p>\n
The benchmark 10-year yield (IN063335G=CC) eased nearly 6 basis points to settle at 6.5155% compared with 6.5732% in the previous session. The 10-year yield eased after a three-day rise. <\/p>\n
Bond yields rise when prices fall. <\/p>\n
Traders covered short positions after strong demand for state debt helped restore confidence in the market. <\/p>\n
Investors also suspected that heavy purchases in the last hour of the session could likely be the central bank buying. <\/p>\n
Indian states issued 4-year to 30-year bonds worth 313.5 billion rupees ($3.50 billion) earlier in the day, well above the 210-billion-rupee debt sale scheduled earlier. <\/p>\n
Traders had feared the supply was too large for the market short on buyers to absorb, but states still ended up raising 297.25 billion rupees. <\/p>\n
Bond market sentiment had soured in the last few sessions as traders scaled back rate easing bets after India’s gross domestic product expanded at 8.2% in the July-September quarter – its fastest pace in 18 months. <\/p>\n
A divergence between sharp economic growth and a record low retail inflation has raised doubts about an interest rate cut when the Reserve Bank of India announces its policy decision on December 5.<\/p>\n
“There is still room for the RBI to cut rates in December, and that expectation likely drove today’s rally,” said Alok Sharma, head of treasury at ICBC. <\/p>\n
“Upside in yields seems limited and there should be a 5-10 basis point rally from here.” <\/p>\n
RATES<\/p>\n
India’s overnight index swap (OIS) rates were flat-to-lower on Tuesday, even as bond yields eased, as traders stood pat before RBI policy outcome. <\/p>\n
The one-year OIS (INR1YMIBROIS=CC) was down 1 bp at 5.48%, while the two-year swap (INR2YMIBROIS=CC) was steady at 5.5025%. The five-year rate (INR5YMIBROIS=CC) inched lower to 5.7975%.<\/p>\n
($1 = 89.6340 Indian rupees)<\/p>\n","protected":false},"excerpt":{"rendered":"By Khushi Malhotra Indian government bonds surged on Tuesday after better\u2011than\u2011expected state auction demand shored up sentiment and…\n","protected":false},"author":2,"featured_media":88072,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-171407","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/171407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=171407"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/171407\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/88072"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=171407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=171407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=171407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}