India bonds rise as investors see value after 10-year yield nears 7.40%

Business Recorder reported that Indian government bonds firmed in early trade on Tuesday as bargain hunters stepped in after yields had climbed almost without pause. The benchmark 6.94% 2036 bond yield stood at 7.3723% at 10:15 a.m. IST, slightly below Monday's close of 7.3857%, which was its highest closing level in three years.

The 10-year yield had jumped 9 basis points on Monday, its sharpest one-day rise in more than six months, and has added 20 bps across four sessions since last week's policy announcement. A trader at a state-run bank said heavy purchases by domestic lenders suggested yields might not climb much from current levels in the near term.

Heavy supply is still on the calendar: Indian states will borrow 312 billion rupees ($3.28 billion), and the Reserve Bank of India plans to sell 250 billion rupees of bonds in an open market operation later in the day, followed by a 340 billion rupee benchmark sale on Friday. Traders also fear a more aggressive rate increase after the 25 bps hike and shift to calibrated tightening, while September consumer inflation rose to 5.54% and Brent stayed above $105 per barrel.