Indian bonds slump ahead of new debt auction

The Indian government bonds slumped Tuesday ahead of the State and Central government’s bond auction worth INR319.47 billion scheduled this week.

The yield on the benchmark 10-year bonds, which moves inversely to its price, rose nearly 1 basis point to 6.56 percent, the long-term 30-year bond yields also climbed nearly 1 basis point to 7.10 percent and the yield on short-term 2-year note bounced 1 basis point to 6.39 percent by 07:00 GMT.

The Reserve bank of India (RBI) is auctioning total 13 SDLs of maturity 10 years maturity, 4 years maturity for Punjab for an aggregate amount of INR179.47 billion on December 27. Also, the Government of India (GoI) has announced the sale of bonds amounting to INR140 billion on December 30 through multiple price based auction.

Lastly, we foresee that bond prices will keep drifting between small gains and losses in quiet trading session. Also, trading activity will resume after New Year celebrations, probably from the second week of January, 2017 as global market receives no more important data till then.

Meanwhile, the benchmark 30-share Sensex is up 0.51 percent to 25,937, while 50-share Nifty traded 0.37 percent higher at 7,944 at 7:10 GMT.