Indian bonds open 1 bps lower, traders eye Rs 32,000 crore bond auction

Reserve Bank of India

Indian bonds opened 1 basis point (bps) lower on February 27, as traders stood at bay ahead of a weekly bond auction later during the day, leading to another fresh supply of debt, while a state government debt auction also came under focus.

The benchmark 10-year bond yield rose to 6.7062 per cent, as compared to 6.6943 per cent in the previous trading session.

The Rs 32,000 crore auction, which is the final auction for the fiscal year of the 10-year 2035 benchmark, could determine the direction of the yields in March, and is viewed as a test of investor appetite for sovereign debt, traders say.

This will also be followed by another debt auction on Monday, where state governments are looking to raise Rs 43,130 crore via a debt sale.

The focus has now come back to demand-supply dynamics for bonds, which has been the theme for the domestic debt market for the last few months. A persistent supply of bonds which have outpaced demand has kept the benchmark 10-year bond yields higher and has reinforced expectations that yields will struggle to move lower in the near-term.