Mumbai: Indian government bond yields edged up on Thursday as weakness in the rupee and an uptick in global crude oil prices hurt, but trading was largely range-bound ahead of key macroeconomic data.
Traders will take opening cues on Friday from the July factory output data and the August consumer price inflation data.
India’s factory output likely shrank for the third straight month in July, albeit at a slower pace than the month before, as production in the country’s core industries picked up, a Reuters poll found.
Standard Chartered Bank Plc. said in a note India will be able to attract between $20-$40 billion in over a year by being getting included in global government bond market indices like the JPMorgan’s Government Bond-Emerging Markets-Global Diversified index.
“The 10-year bond yield may be anchored around the 8.50% mark but we will continue to see volatility until the policy,” said Anoop Verma, executive vice-president at Development Credit Bank Ltd.
“The market will monitor IIP, CPI, WPI and the Fed meeting outcome for direction. We could see the 10-year in a 8.25% to 8.60% range,” he added.
The benchmark 10-year bond yield closed up 4 basis points at 8.50% after moving in a 8.42% to 8.52% range during the session.
The rise in global crude oil prices also hurt sentiment for bonds, dealers said.
Global oil prices inched above $112 a barrel as investors waited to see if diplomatic efforts to eliminate Syria’s chemical weapons would avert a US strike that could further disrupt Middle East supplies.
Traders will monitor the wholesale price inflation data due on Monday ahead of the upcoming monetary policy decision on 20 September, but the policy will be largely based on the outcome of the US Federal Reserve policy decision on 18 September, they add.
Reserve Bank of India governor Raghuram Rajan will be announcing his first monetary policy decision on 20 September. In the overnight indexed swap market, the benchmark five-year rate edged up 9 basis points to 8.40% while the one-year rate closed up 11 basis points at 9.24%.