Indian bonds gain on strong overseas demand; notes auction in focus

The Indian government bonds continued to trade firmer Thursday as overseas banks boosted demand for safe-haven assets. Also, investors await the auction of four bonds, which is scheduled to take place on Friday.

The yield on the benchmark 10-year bonds, which moves inversely to its price, fell 1-1/2 basis points to 7.120 percent, the yield on super-long 30-year bond also dipped nearly 3 basis points to 7.276 percent and the short-term 2-year note yield slid 1 basis point to 6.851 percent by 07:30 GMT.

According to Reuters, the Reserve Bank of India will auction four bonds for 140 billion rupees tomorrow including 80 billion rupees of the benchmark paper, which will take its issuance to 870 billion rupees. The RBI will set underwriting fees for the same today. RBI typically stops issuance of a note once its total outstanding reaches 850 billion rupees to 950 billion rupees.

Moreover, the Indian bonds have been closely following developments in oil markets because of their impact on inflation expectations. The International benchmark Brent futures fell 0.10 percent to $49.00 and West Texas Intermediate (WTI) dipped 0.04 percent to $46.75 by 08:00 GMT.

Meanwhile, the Sensex fell 0.17 percent or 43.69 points to 28,016.25 and Nifty-50 futures traded 0.38 percent higher or 31.75 points at 8,687.25 by 08:00 GMT.