Indian government bonds turned
higher after a weak opening on Monday, with the recent spike in
benchmark yields attracting value buyers.
The benchmark Indian 6.48% 2035 bond yield
was at 6.9902%, as of 10:05 a.m. IST, after closing at 7.0148%
on Thursday.
Bond yields move inversely to prices. Indian markets were
closed on Friday for a public holiday.
Early election result trend in the eastern Indian state of
West Bengal showed Prime Minister Narendra Modi’s Bharatiya
Janata Party-led coalition in the lead. The state is one of the
few in the country that Modi’s party had failed to form a
government in so far.
Three other states and a union territory are also announcing
results of the elections held last month.
“After the initial jitters, bulls have returned with some
confidence as oil, even though elevated, has stabilised, while
election results seem to be favouring the ruling party (at the
federal government),” trader with a state-run bank said.
Benchmark Brent crude was around $109 per barrel, after
hitting $125 a barrel last week.
Oil eased after President Donald Trump said he would begin
an effort to free up ships stranded in the Strait of Hormuz,
even as there was no visible progress in peace talks with Iran.
Though there has been a ceasefire since early April, Iran
has kept shipping through the strait, a conduit for about 20% of
global oil supplies, largely shut.
The sharp rise in oil prices is of particular concern for
India, which imports nearly 90% of its crude needs, as higher
energy costs could inflate the import bill and add pressure to
inflation and fiscal deficit.
RATES
India’s overnight index swap rates eased slightly in line
with government bond yields.
The one-year OIS rate was at 5.97%, while
the two-year swap rate was not yet traded. The
five-year OIS rate was at 6.58%.