India Bond Yields Tad Lower, Traders Eye Special OMO Result

Thursday,   14-Jan-2021   01:37 PM (IST)

Indian federal government bond yields were marginally lower in the afternoon session as traders awaited the outcome of the so-called special open market operation by the central bank today. The benchmark 5.77% 2030 bond changed hands at 98.82 rupees, yielding 5.93% at 1:00 p.m. in Mumbai, against 98.71 rupees and 5.95% yield at close yesterday. The Indian rupee was at 73.10 to the dollar against 73.15 yesterday. The Reserve Bank of India will buy the benchmark, 5.22% 2025 paper and the 6.57% 2033 note, while simultaneously selling bonds maturing in 2021 and 2022 worth 100 billion rupees each at a special open-market operation today. The central bank has so far bought bonds worth 1.27 trillion rupees via special OMOs and 400 billion rupees via outright OMOs. The RBI has assured to absorb the record government borrowing and has been conducting regular OMOs to support market sentiment. New Delhi is due to sell 220 billion rupees of bonds tomorrow. New Delhi is expected to present its budget for the next fiscal year on Feb. 1 amid expectations of higher borrowing and fiscal spending. Care Ratings expects the country’s fiscal deficit to widen to 7.8% of gross domestic product this fiscal, as against New Delhi’s expectation of a 3.5% budget gap in this fiscal due to revenue loss and higher expenditure amid the pandemic. Fitch Ratings expects the country's economy to contract 9.4% in this financial year before stabilising at around 6.5% from 2022-23 to 2025-26. The benchmark Brent crude oil contract was trading 0.1% lower at $56 per barrel, extending yesterday’s 0.9% fall. India imports nearly 85% of its crude oil requirement.