Bond Prices Inch Up 2 Basis Points Amid Weaker Brent Oil Prices as Traders Await RBI Policy Decision

Indian Sovereign Bond Prices Rise as Benchmark 10-Year Yield Falls

On March 11, Indian sovereign bond prices edged higher as the benchmark 10-year yield slipped nearly 2 basis points. The benchmark 10-year bond yield fell to 6.65% from 6.67% in the previous session. Bond yield and prices move inversely.

The benchmark Brent crude has fallen below $100 a barrel following reports that the International Energy Agency (IEA) has proposed the largest release of oil reserves in its history. This decline in oil prices has eased concerns of domestic inflationary pressures, which can push government bond yields higher.

India is a net energy importer, and a jump in oil prices would stoke domestic inflationary pressures, potentially pushing government bond yields higher. The Reserve Bank of India (RBI) likely intervened in the bond market to prevent yields from rising beyond 6.7%, traders said.

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The RBI's open market bond purchase auctions are being closely watched by traders. On March 10, the yield spiked to 6.77%. The RBI's Rs 50,000 crore open market bond purchase later this week will be closely tracked by traders, following a similar liquidity infusion on Monday.