Bond prices rise for third straight day1 min read . Updated: 24 May 2019, 09:30 AM IST
- The 10-year bond yield was at 7.219%, compared with Thursday's close of 7.236%
- Since the start of May, bond yield has fallen nearly 20 basis points
MUMBAI : India's 10-year bond yield was trading lower for the third session on Friday as analysts expect Narendra Modi's election victory will give the NDA government enough firepower to avoid populist measures.
The 10-year bond yield was at 7.219%, compared with Thursday's close of 7.236%. Since the start of May, bond yield has fallen nearly 20 basis points.
Benign retail inflation outlook, an expected rate cut and hopes of continued bond purchase by the Reserve Bank of India (RBI) also boosted the sentiment. However, analysts expect that the rate cut will be a close decision due to global uncertainties, lack of clarity on monsoon and higher oil prices.
“Election results bode well for confidence towards Indian currency and bonds, but beyond the near-term it will be a challenge to skirt weak global signals. After the results, attention here on will return to the to-do list, key amongst which is the need to address the ongoing cyclical slowdown in growth and continue with the reform agenda," said Radhika Rao, economist at DBS Bank.
Traders are also keeping an eye on the next budget for fiscal deficit and borrowing targets.
Meanwhile, rupee strengthened 0.3% to 69.80 a dollar while India's benchmark Sensex rose 0.68% to 39,076.26 points.
So far this year, the rupee has risen 0.13% against the US greenback. During the period, foreign investors bought $9.51 billion in Indian equities and sold $446.80 million in debt market.
Asian currencies were trading higher amid speculation that the Bank of Thailand will tolerate a stronger exchange rate after the US said it’ll impose duties on nations with undervalued currencies.
Philippines peso was up 0.15%, Thai Baht 0.11%, Indonesian rupiah 0.08%, Japanese yen 0.06%, Singapore dollar 0.05%, Malaysian ringgit 0.05%. However, South Korean won was down 0.1% and China Renminbi 0.08%.
The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 98.116, up 0.08% from its previous close of 98.041.
(Bloomberg contributed to this story)