Bond yields move in the opposite direction to prices.
Investors in the so-called “other category” net bought bonds worth 74.84 billion rupees ($823.12 million) on Tuesday, the biggest single-session purchase since June 2023, according to clearinghouse data.
The category includes insurers, pension funds, provident funds, corporates and the Reserve Bank of India.
Official RBI data on debt market activity for the week will be out on March 6, but continued buying from this category could trigger a fresh round of price appreciation.
“If we also have a decently high buying rate today, we can easily continue the auction of the 10-year paper at a level of around 6.65%,” said a trader at a state-owned bank. New Delhi will sell the 2035 10-year benchmark bond for 320 billion rupees on Friday, the last sale of the note for the financial year.
The central bank has had a record year in terms of liquidity injections and debt purchases, and any participation by the RBI in Tuesday’s purchase would further boost liquidity.
The central bank has bought 6.83 trillion rupees worth of bonds and, along with a reduction in cash reserve ratio and FX swaps, has injected around 11.5 trillion rupees of liquidity so far this fiscal.
PRICES
Indian overnight index swap (OIS) rates did not show any activity and are expected to see little change during the session.
The one-year OIS rate ended Tuesday at 5.50%, while the two-year OIS rate closed at 5.6075%. The five-year OIS rate ended marginally at 6.0325%.
($1 = 90.9225 Indian rupees).
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