Indian 10-year bonds yield sag on weak March Wholesale inflation figure

The Indian 10-year bonds modestly firmer on Monday as March wholesale prices fall for 17th straight month, rising expatiation for further Reserve Bank of India (RBI) easing in the up-coming monetary policy. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved down 0.08 pct to 7.431 pct and the yield on the 3-year bond dipped 0.03 pct to 7.166 pct by 0707 GMT.

India’s Wholesale price index (WPI) fell 0.85 pct y/y, from down 0.91 pct in February, pressurised by weak international oil prices and manufactured goods. Meanwhile, India's finance minister Jaitley said that inflation is expected to decline further and inflation for FY16 is seen at 5.5%.

“The central bank is expected to keep the policy on hold through this year, but might lower rate one last time if monsoon rains are favourable enough to keep food inflation sustainably lower and growth continues to be weak”, ANZ added in its Wednesday’s report.

Lastly, we foresee that Indian government bonds are likely to gain, as investors may buy notes on expectations that the Reserve bank of India may go for further monetary easing in 2016.

Meanwhile, Sensex rose 0.33 pct or 84.38 points to 25,711.13 and Nifty-50 climbed 0.53 pct or 35.90 points to 7892.40 by 0723 GMT.