Indian government bonds were stuck in a tight range in early deals on Wednesday, as sentiment remained weak and traders stayed put ahead of the U.S. Federal Reserve’s policy outcome, due later in the day.
The yield on the benchmark 10-year bond (IN063335G=CC) was at 6.3617% as of 10:00 a.m. IST, after closing at 6.3589% on Tuesday.
Bond yields move inversely to prices.
“Selling pressure is expected to continue till Friday’s auction as traders are looking to exit positions,” a trader at a primary dealership said. “There is no strong incentive to buy.”
Traders who lapped up debt in anticipation of an August rate cut by the local central bank are still paring positions, traders said.
Friday’s auction, in which New Delhi will sell 320 billion rupees ($3.67 billion) worth of longer-tenor papers, will be crucial to gauge demand in the bearish environment.
A rise in U.S. Treasury bonds, however, is providing some comfort to the market.
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