The yield on the benchmark 10-year note was at 6.5189% as of 10:40 a.m. IST. It ended Monday at 6.5343%.
Bond yields fall when prices rise.
The “Others” category of buyers bought bonds worth over 40 billion rupees ($455 million) on a net basis on Monday, the highest in more than five weeks.
Traders suspect the Reserve Bank of India likely intervened to support the yields.
Separately, the local currency halted a three-day losing streak on support from the RBI after an uptick in the dollar index. It opened 39 paisa higher at 88.39 against the greenback on Tuesday, the best opening since October 15 this year.Optimism around the rupee spilled into bonds, driving the 10-year yield beneath the key 6.52% mark and fuelling expectations of more easing ahead.”The market taken some positive cues as rupee appreciated,” said Umesh Tulsyan, managing director at Sovereign Global Markets.
“We saw good buying happen in first hour of trade and some unwinding of short trade can be seen during the day.”
Focus will also be on the weekly state debt sale later in the day, with cut-off yields offering cues on appetite in a market short on buyers, traders said.
Indian states are seeking to raise 136 billion rupees ($1.53 billion) through bonds sale later in the day, with the quantum lower than the scheduled 194.50 billion rupees for a second week, according to the calendar.
The central bank will also meet select primary dealers later today, with talks expected to centre on liquidity stress and weak demand.
RATES
India’s overnight index swap rates (OIS) were flat as traders awaited more directional cues.
The one-year OIS rate was at 5.4725% and the two-year rate at 5.43%. The five-year swap rate was at 5.68%. ($1 = 88.7850 Indian rupees)
