Bonds Hold Steady at Market Open Amid Anticipation of RBI Debt Purchases

Indian Bond Market Update

March 13, 2024

The Indian bond market opened steady on March 13, with the 10-year benchmark yield trading at 6.6769 percent. Market participants are cautious due to a surge in Brent crude prices, which are currently trading near $100 per barrel. The ongoing Iran-Iraq conflict and the US decision to temporarily allow the purchase of Russian oil have contributed to the increase in oil prices.

Higher oil prices may lead to price pressures, potentially impacting government bond yields. In response to this development, the Reserve Bank of India (RBI) will conduct an Open Market Operation (OMO) of Rs 50,000 crore to bolster banking system liquidity. This move is expected to provide relief to the bond market, which has seen the RBI intervene in recent sessions to keep yields below the 6.7 percent mark.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Inflation Update India's inflation print for February came in at 3.21 percent, up from 2.75 percent in January. Despite the increase, inflation remains within the RBI's target range of 2-6 percent.