India's benchmark bond breaks 4-day falling streak as value investors return

According to Business Recorder, Indian government bonds ended a four-session decline on Tuesday as the benchmark yield pulled back from a three-year high that had drawn buyers. The 6.94% 2036 bond closed at 7.3655%, compared with 7.3857% the previous session. Over the prior four sessions, the yield had climbed 20 basis points after a policy rate increase and a liquidity drain by the central bank.

The rupee strengthened 0.5% against the dollar to end at 95.28, outperforming regional peers. New central bank steps aimed at easing pressure on the currency, along with probable spot market intervention, were cited as the main support. Bets on a December rate increase have firmed after consumer inflation rose to 5.54% in September, while Brent crude stayed above $105 per barrel.

Supply weighed on gains, with Indian states raising more than 300 billion rupees through bonds and the Reserve Bank of India selling 250 billion rupees of notes via an open market operation. Harsimran Sahni of Anand Rathi Global Finance said the 10-year yield appeared supported near 7.40%, but further OMO sales could push it toward a range of 7.60% to 7.65%. Traders were also awaiting US inflation data due Wednesday for direction on the Federal Reserve.