Indian bonds open 1 basis point higher; state government debt fundraising in focus

Traders are looking forward to the results of the state governments’ fundraising via bonds, amounting to Rs 44,500 crore, which is the biggest weekly debt sale.

Indian bonds opened 1 basis point higher on February 24 from the previous session, as traders remained on the sidelines ahead of state governments’ debt fund raise later in the day, while global uncertainty regarding the change in US tariffs structure kept market participants cautious.

The benchmark Indian bond yield was trading at 6.7035 percent, as compared to 6.71 percent in the previous session.

Traders are looking forward to the results of the state governments’ fundraising via bonds,  amounting to Rs 44,500 crore, which is the biggest weekly debt sale. Moreover, the Indian government plans to auction the benchmark 10-year 6.48% GS 2035 note later this week, for which market participants will be watching closely.

Oil prices have also remained a concern, particularly in the wake of US-Iran tensions, given that India is a net oil importer. Even though Brent crude prices eased during the day to trade at $71.40 per barrel, they remained near a seven-month high.

Locally, a persistent supply of government bonds has outstripped demand. This imbalance has pushed yields higher in the previous few sessions and capped price gains.

“Persistent issuance overhang has reinforced expectations that yields will struggle to move materially lower. Yields remain sensitive to global developments and oil market pressures, which continue to influence sentiment,” Kunal Sodhani, Head of Treasury at Shinhan bank said.