MUMBAI: Indian government bonds traded in a narrow range on Thursday, ahead of the federal borrowing calendar and a weekly debt auction.
The yield on the 10-year benchmark note settled at 6.4972% against the previous close of 6.4908%.
New Delhi is set to issue bonds worth 320 billion rupees ($3.61 billion) on Friday.
The borrowing calendar, expected to be released in the next few days, will be a key trigger for the market as investors worry the supply of longer-tenor debt may exceed demand.
States’ quarterly borrowing calendar is also slated for release at the end of the month.
Traders are also staying on the sidelines ahead of the Reserve Bank of India’s policy decision on October 1.
The Monetary Policy Committee, which unanimously decided to hold rates in August, will maintain that call at its September 29–October 1 meeting, according to 45 of 61 economists polled by Reuters. The remaining 16 predicted a 25-basis-point cut.
Citi on Thursday joined major firms like the State Bank of India, Barclays, Capital Economics, Nomura and MUFG in calling for a rate cut next week.
Some market participants are anticipating “dovish” signals from the policy such as revisions to the growth and inflation outlook.
“The October RBI policy is a close call as strong arguments can be made for a rate cut as
well as a pause,” IDFC First Bank said in a note.
Rates
India’s overnight index swaps inched lower in a muted session.
The one-year OIS rate dipped slightly to 5.4575%, while the two-year OIS rate settled nearly 2 bps lower at 5.43%.
The liquid five-year OIS rate was flat at 5.725%.
American Dollar Exchange Rate