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Indian bond yields edged lower on Monday, despite an uptick in global crude oil prices as a risk-off trade in global markets saw the domestic sharemarkets crash and the rupee pushed to near two-month lows.

Traders said expectations of the Reserve Bank of India staying accomodative aided sentiment for bonds even as global crude oil prices surged, which can push up domestic inflation.

India's benchmark 10-year bond yield ended trading at 6.67%, down 3 basis points from its previous close and off its session high of 6.72%.

"While the RBI may choose to normalise the policy corridor over the next six months, we now expect the repo rate hikes to begin in Q3 22 (August policy meeting), with risks of delays," Rahul Bajoria, an economist at Barclays wrote in a note.

India's central bank is committed to its inflation mandate and the likely uptick in January inflation towards the upper end of its target band should not create any panic, RBI Governor Shaktikanta Das said.

Das reiterated that their inflation projection of 4.5% in 2022/23 was robust and made after taking into account various crude oil levels and scenarios. January inflation data is due at 1200 GMT.

The RBI left key rates unchanged and retained its accommodative policy stance last week, as it sought to ensure a more broad-based recovery and downplayed the risks from inflation.

Oil prices were steady in seesaw trading, after hitting a more than seven-year high on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from one of the world's top producers.

Traders said the possibility of the remaining two auctions in the current financial year getting cancelled after the government's decision to cancel the previous week's auction was also helping.

The partially convertible rupee ended at 75.6050/6150 per dollar, after touching 75.64, its lowest level since Dec. 22. It had ended at 75.38 on Friday. Stock indexes dropped more than 3% each.

"Crude is causing a global risk-off but RBI is looking for growth and ignoring inflation till the end of the year," a senior fixed income trader at a private bank said.

"Bond yields should remain rangebound for now and dance to the news flow but post second half of March when the supplies are in focus, that is when reality will hit," he added. 

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