The Indian bonds recovered Friday, following increased buying by investors as tension waned off surrounding Indo-Pak border issues after Indian forces conducted "surgical strikes" on suspected militants preparing to infiltrate from Pakistan-occupied Kashmir.
The yield on the benchmark 10-year bonds, which moves inversely to its price, fell 4 basis points to 6.975 percent, the super-long 30-year Treasury yield dipped more than 2 basis points to 7.189 percent and the short-term 2-year note yield slid 2 basis points to 6.726 percent by 07:10 GMT.
India's monetary policy committee will decide the policy interest rate at the scheduled October 4 review, and the newly-appointed external members to the panel would be at an arm’s length from the government. Also, interest rate reduction is around the corner amid expectations that inflation will decelerate further in coming months.
According to Reuters, state-run banks were net buyers of government notes for the third consecutive session yesterday and purchase over 169 billion rupees of bonds, their highest-every purchase, according to traders. Their total net purchase in the last three sessions stands at 265 billion rupees, as per data from Clearing Corp of India Ltd.
Traders now await the auction of four bonds worth 140 billion rupees today, which include 80 billion rupees of the 7.61 percent 2030 note. India will borrow 2.45 trillion rupees from the local debt market in the last six months of this financial year through 17 bond auctions, they added.
Meanwhile, the Sensex rose 0.20 percent or 55.55 points to 27,883.08 and Nifty-50 futures traded 0.16 percent higher or 18.20 points at 8,662.25 by 07:10 GMT.
