MUMBAI: Indian federal bond yields closed little changed on Monday with traders reluctant to build large positions as they waited to see whether the Reserve Bank of India will buy bonds this week to help ease tight liquidity conditions.
The 10-year benchmark bond yield closed at 8.18 percent, up 2 basis point from Friday, after moving in a tight 8.15 to 8.19 percent band.
"The RBI's debt purchase is the next trigger for the 10-year yield," said Debendra Dash, a fixed-income dealer at Development Credit Bank. "Till then, it is expected to trade around 8.15 levels."
The RBI usually announces plans to conduct open market operations (OMOs) on Tuesdays, after the market closes.
It has bought about 807.2 billion rupees ($16.44 billion) of bonds via OMOs since late November.
India is scheduled to sell 130 billion rupees of debt on Friday.
Standard & Poor's said on Monday that India faced challenges to keep its stable rating outlook because of high inflation, a weak fiscal position and slower economic growth.
Greece let another deadline slip for responding to painful terms for a new EU/IMF bailout but traders said this did not affect the Indian debt market.
"The sentiment is largely driven by the expectations of open market operations. Local factors are mostly dominating the market these days," a trader with a foreign bank said.
Total trading volume was 118.55 billion rupees, higher than the daily average of 90 to 100 billion rupees, data from the Clearing Corp of India showed.
The one-year swap rate and the benchmark five-year swap rate closed 1 basis point higher at 8.05 and 7.29 percent respectively.
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