Indian government bonds
held steady in early deals on Tuesday, but traders retained a
bullish bias as marginally lower oil prices offered support,
while focus stayed on the US-Iran peace talks.
India’s benchmark 6.48 per cent 2035 bond yield was
at 6.8842 per cent, as of 10:05 a.m. IST. It settled at 6.8901 per cent on
Monday. Bond yields move inversely to prices.
“Lower oil prices are lending support to government bonds
and keeping sentiment constructive, though traders remain wary
that any reversal in crude could cloud the outlook,” a trader
with a primary dealership said.
Oil prices were marginally lower on expectations that peace
talks between the U.S. and Iran will take place this week and
allow more supply to flow from the key Middle East producing
region.
Investors are focusing on the likelihood that talks will
result in the extension of the existing ceasefire or a final
agreement.
Higher oil prices are detrimental to India, which relies
heavily on imports to meet its energy needs. Crude oil imports
constitute around one-fourth of India’s total imports, making
the country vulnerable to global oil price shocks.
Meanwhile, Indian states are set to raise ₹16,900 crore
($1.81 billion) through the sale of bonds maturing in seven to
30 years, later in the day.
RATES
India’s overnight index swap rates inched lower, but volumes
remained shallow.
The one-year OIS rate was at 5.77 per cent, while
the two-year swap rate was at 5.97 per cent. The
liquid five-year traded at 6.35 per cent.
($1 = 93.3000 Indian rupees)