Mumbai: Indian federal bond yields held close to five-week lows on Friday as the oversupply of cash in the banking system led to demand for debt but investors were awaiting for the auction outcome later in the day for cues.
At 2pm, the yield on the 10-year benchmark bond was at 6.40% down from 6.43% at the close of Thursday. It fell to as low as 6.36% earlier, the lowest since 16 March.
Banks parked more than Rs1 trillion at the central bank’s reverse repo for the sixth consecutive trading session on Thursday, indicating the extent surplus liquidity. The central bank absorbed Rs505.55 billion at its morning reverse repo auction on Friday.
The government may sell the 7.56% 2014 bond at 6.15% and the 8.24%, 2027 bond at 7.50% at a twin auction worth a total of Rs120 billion rupees on Friday, a Reuters poll of traders shows.