MUMBAI: Indian government bond yields are likely to be little changed in early deals on Friday, with market participants expecting a consolidation around current levels after the recent decline.
The benchmark 10-year bond yield is likely to move between 6.62% and 6.65%, a trader with a private bank said, compared with its previous close of 6.6366%.
“Underlying sentiment is very positive, with expectations of yet another rate cut next month gaining more strength,” the trader said. “Still, we could see a strong support at 6.62% level for the 10-year benchmark yield.”
Bond investors have been building positions on expectations that the Reserve Bank of India will reduce its policy rate for the second time this year in April.
The RBI had lowered its repo rate by 25 basis points in February, its first cut in nearly five years.
The RBI policy decision is due on April 9.
India bond yields may see slow downward move after Fed decision
Indian bond yields have eased 6 bps this week after stronger-than-expected demand for a state debt sale and a surprise announcement of another open market bond purchase from the RBI for March.
The RBI has already purchased bonds worth 1 trillion rupees ($11.59 billion) this month and is set to buy bonds worth another 500 billion rupees on March 25.
The central bank has already injected more than 5.50 trillion rupees into the banking system since mid-January through a combination of primary and secondary market bond purchases, FX swaps and early-April maturity repos.
The bullish sentiment was also supported by the US Federal Reserve maintaining its stance of 50 bps of interest rate cuts this year.
Some traders had speculated that the Fed may lower its rate easing forecast to 25 bps due to concerns stemming from US President Donald Trump’s tariff campaign.
Interest rate futures are pricing in around 67 bps of US rate cuts in 2025, up from around 58 bps before the Fed decision.
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