Indian government bond yields likely to continue edging down: Capital Economics

Quotes from Capital Economics:

-In bond markets, yields on India's local currency debt have edged down ever since the RBI cut interest rates at an unscheduled meeting in mid-January. Subsequently, the central bank kept rates on hold at its scheduled meeting on 3rd February but, even so, bond yields have dropped to their lowest level since June 2013.

-Yields have been driven lower by both domestic and foreign investors. Data up to Monday show that foreign purchases of Indian debt remain strong. Looking ahead, we expect the repo and reverse repo rates to end the year at 7.00% and 6.00% respectively, 75bp lower than where they are today. As such, we think that bond yields are likely to continue edging down over the coming months.