Indian bonds plunge as investors book profit after six days of consecutive gains

The Indian bonds plunged Thursday as investors cashed in profits after relishing six days of consecutive gains.

The yield on the benchmark 10-year bonds, which moves inversely to its price, rose more than 1 basis point to 6.935 percent, the super-long 30-year Treasury yield also jumped 1 basis point to 7.150 percent and the short-term 2-year note yield bounced 1 basis point to 6.682 percent by 07:10 GMT.

According to Reuters, Indian sovereign bonds had gained for six consecutive sessions through yesterday, posting their longest winning streak in two months. Local bonds have rallied after the U.S. Federal Reserve maintained status quo, and expectations of a slowing domestic inflation boosted possibilities of more than one rate cut in India.

India’s central bank and Ministry of Finance officials are scheduled to meet today to decide the borrowing calendar for fiscal second half that begins October 1. India is expected to borrow 2.45 trillion rupees on a gross basis through bonds in October-March. The RBI will auction four bonds worth 140 billion rupees on September 30, which includes 80 billion rupees of the 7.61 percent 2030 note. The RBI will also auction 91-day and 364-day treasury bills worth 130 billion rupees today, Reuters reported.

Moreover, the Indian bonds have been closely following developments in oil markets because of their impact on inflation expectations, as India imports 80 percent of its crude oil requirements. Crude oil prices climbed nearly 6 percent after OPEC confirmed that the group has struck a deal to lower crude output at its policy meeting in November.

This is the first agreement to cut production since the market crashed in 2014 following a supply glut. The International benchmark Brent futures rose 4 percent to $49.06 and West Texas Intermediate (WTI) also bounced 4 percent to $47 from the yesterday’s closing session.

Meanwhile, the Sensex fell 0.73 percent or 206.55 points to 28,086.26 and Nifty-50 futures traded 1.54 percent lower or 135.10 points at 8,612.75 by 07:10 GMT.