Mumbai: India’s 10-year bonds fell the most in more than three weeks on speculation that investors will demand higher yields at a government debt sale on 27 April.
Bonds snapped a two-day advance as the government will sell Rs6,000 crore of bonds on 27 April, taking the total amount of debt sold this month to Rs16,000 crore. Bonds also dropped on speculation that some investors may have sold debt to gain from the rise in prices earlier this week. “The market is positioning itself before tomorrow’s auction, which will increase the supply of debt,” said Poonam Tandon, a bond trader at Development Credit Bank Ltd in Mumbai. “People are making room for fresh investment.”
The yield on the benchmark 8.07% note due January 2017 rose 9 basis points, or 0.09 percentage point, to 8.06% as of the 5.30pm close in Mumbai, according to the central bank’s trading system. The price, which moves opposite to yields, fell 0.57, or 57 paise per Rs100 face value, to 100.07.
Ten-year yields have fallen 13 basis points in the past two days. Friday’s debt auction is the second in the fiscal year that started 1 April. The government plans to raise as much as Rs92,000 crore from 11 bond auctions in the first half of this fiscal year. It is seeking to borrow a total of Rs1.55 lakh crore this fiscal, up 2% from the previous year. “Some traders sold securities to take profits after the rally in recent days,” said P. Venkatesh, chief bond trader at state-owned Corporation Bank in Mumbai.