MUMBAI, July 24 (Reuters) – Indian government bonds were little changed in early deals on Thursday, as traders stayed on the sidelines ahead of New Delhi’s debt sale and eyed cues on the central bank’s rate cut trajectory.
The yield on the benchmark 10-year bond was at 6.3162% as of 10:30 a.m. IST, compared with the previous close of 6.3117% on Wednesday.
Bond yields move inversely to prices.
New Delhi is set to sell bonds worth 360 billion rupees ($4.17 billion) on Friday, including 300 billion rupees of the benchmark paper.
“Traders could build some short positions in the latter half of the day, but the volumes will remain muted,” a trader at a primary dealership said.
“We don’t expect another rate cut in the coming policy, but we are looking for more signals for clarity on the RBI’s rate cut moves.”
The Reserve Bank of India’s next policy meeting is due on August 6.
Trading volumes in the bond market will likely remain shallow, with yields stuck in a narrow range till the policy decision, traders said.
Investors are also awaiting updates on a potential U.S.-India trade deal to assess the impact of tariffs on the country’s inflation, traders said.
The prospects of an interim trade deal before Washington’s August 1 deadline have dimmed, as talks remain deadlocked over tariff cuts on key agricultural and dairy products, two Indian government sources told Reuters.
U.S. President Donald Trump threatened a 26% tariff on Indian imports in April but paused implementation to allow for talks. That pause ends on August 1.
India’s overnight index swap rates were confined to a range in early moves, as traders awaited fresh cues on policy easing.
The one-year OIS was steady at 5.48% and the two-year OIS rate was little changed at 5.45%. The liquid five-year OIS rate was flat at 5.67%.
($1 = 86.2750 Indian rupees) (Reporting by Khushi Malhotra; Editing by Eileen Soreng)
