Brent crude futures fell about 1% to $71.07 on Monday, but oil prices were still near six-month highs, a key risk for net energy importer India.
At the same time, traders cautiously awaited two major debt sales. Indian states will raise 445.5 billion rupees ($4.91 billion) in their biggest weekly debt sale on Tuesday, while New Delhi will auction the benchmark 10-year bond on Friday. The 6.48% benchmark bond yield in 2035 stood at 6.7143% at 10:30 AM IST. On Friday, yields ended at 6.7215%, after rising 4 basis points, the biggest jump in two weeks.
“No further escalation in the Iran-US conflict has eased jitters, but the market should remain within a range as supply continues to flow,” said a trader at an asset manager. Separately, two members of India’s central bank rate-setting committee pointed to opportunities for future rate cuts, which would help improve sentiment and lead to buying, traders said.
Yields rose in the second half of last week, but some investors cited the value of buying government bonds.
The ‘others’ category, which includes insurers, pension funds, corporates and the central bank, was the biggest net buyer last week, with purchases of 19.6 billion rupees. Foreign banks, private banks and investment funds remained net sellers. PRICES
Indian overnight index swap (OIS) yields fell as sentiment improved on lower oil prices. The one-year OIS rate remained stable at 5.52%. The two-year interest rate and the five-year OIS interest rate fell by 1.5 basis points to 5.63% and 6.0775% respectively.
($1 = 90.7475 Indian Rupees)
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