The yield on the benchmark 10-year bond was at 6.2779% as of 9:45 a.m. IST, compared with the previous close of 6.2615%. The five-year 6.75% 2029 bond was at 5.9606% after ending at 5.9434%.
“Market will remain in a neutral to bearish zone till the time Middle East tensions do not ease, as that will keep alive the risk of oil prices shooting higher,” trader with a state-run bank said.
On Thursday morning, Indian government bond yields saw a rise, largely driven by soaring oil prices. Investors are eagerly anticipating new debt offerings amid ongoing tensions in the Middle East, which are contributing to market volatility. New Delhi plans to issue bonds totaling 270 billion rupees on Friday.
“Tomorrow’s debt auction would also provide crucial insight on investors’ psyche,” the trader added.
New Delhi to sell bonds worth 270 billion rupees ($3.12 billion) on Friday, which includes 150 billion rupees of the liquid five-year bond.
The benchmark Brent crude contract was hovering around $76 per barrel, has gained over 10% in the last five sessions on worries that the Iran-Israel conflict could disrupt supplies.India imports a bulk of its crude oil needs and higher prices could impact the nation’s inflation outlook.Earlier this month, the Reserve Bank of India reduced its inflation forecast for the current year to 3.7%, while cutting its key lending rate by a steeper-than-expected 50 basis points.
It, however, reverted to a “neutral” stance from “accommodative”, prompting analysts to forecast the end of the easing cycle.
The minuets of this meeting are due after market hours on Friday.
Meanwhile, the Federal Reserve held interest rates steady on Wednesday and maintained expectations for two rate cuts this year, but a rising minority also expects no rate cuts at all.
RATES
Indian overnight index swap (OIS) rates were witnessing paying pressure, but volumes remained shallow.
The one-year OIS rate was not yet traded, while the two-year OIS rate was at 5.50% and the liquid five-year was at 5.72% ($1 = 86.5480 Indian rupees)
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