INDIA BONDS-India bond yields seen little changed ahead of weekly debt sale

Credit: REUTERS/THOMAS WHITE

By Bhakti Tambe

MUMBAI, Dec 15 (Reuters) - Indian government bond yields are likely to open relatively unchanged on Friday, after ending near a one-month low in the previous session, as market participants await weekly debt sale for further cues.

The 10-year benchmark bond yield IN071833G=CC is expected to open in the 7.18-7.23% range, following its previous closing at 7.1969%, a trader with a private bank said.

"After yesterday's sharp rally post Fed policy, we could see some profit booking and auction of 10-year bond will provide additional directional cues," the trader added.

Bond yields fell sharply on Thursday, tracking a plunge in U.S. yields, after the U.S. Federal Reserve signalled that policy tightening is over and projected three rate cuts in 2024.

"It was a dovish pause from Fed but not a pivot. Fed is likely to pivot in Jan-Mar of 2024 and may cut rates starting May," said Deepak Agrawal, chief investment officer for fixed income at Kotak Mahindra Mutual Fund.

After the Fed pivot, the Reserve Bank of India (RBI) is likely to change its stance between April and June It could also begin to incrementally increase liquidity, with the possibility of rate cuts in India in Oct-Dec next year, he added.

Markets are now projecting a 77% chance of the Fed cutting rates in March. FEDWATCH

Last week, the RBI maintained its key repo rate at 6.50%, signalling a sustained tight monetary policy stance as it monitors inflation risks.

Meanwhile, oil prices rose on Thursday, driven by a weaker dollar and an upward revision in the International Energy Agency's oil demand forecast. O/R

KEY INDICATORS:

** Brent crude futures LCOc1 0.3% higher at $76.86 per barrel, after rising 3.2% in previous session

** The 10-year U.S. Treasury yield US10YT=RR at 3.9562%, two-year yield US2YT=RR at 4.4321%

** India to sell sovereign bonds worth 330 billion rupees ($3.96 billion)

** RBI to set underwriting fees for 330 billion rupees sovereign bond auction

** RBI to conduct 7-day variable rate repo auction for 1 trillion rupees

($1 = 83.2800 Indian rupees)

(Reporting by Bhakti Tambe; Editing by Dhanya Ann Thoppil)

((Bhakti.Tambe@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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