Indian bond yields likely to begin edging down

In bond markets, yields on India's local currency debt have edged up in recent weeks, but remain close to two-year lows. 

Yields have been kept relatively low by both domestic and foreign investors. Data up to Wednesday show that foreign purchases of Indian debt remain strong.

Capital Economics notes...

• Looking ahead, we expect the repo and reverse repo rates to end the year at 7.00% and 6.00% respectively, both 50bp lower than where they are today. 
  
  
• As such, we think that bond yields are likely to begin edging down again over the coming months.