MUMBAI: Indian federal bond yields were unchanged on Monday as traders awaited the details of this week's debt sale and whether the central bank would announce another round of bond purchases via open market operations.
The Reserve Bank of India has conducted three bond purchases via open market operations in as many weeks to offset the impact on rupee liquidity from its suspected interventions in currency markets.
The central bank has also bought a net 123.5 billion rupees ($2.23 billion) worth of bonds from the secondary market in the week to May 18, according to the latest available data.
However, traders were unsure if the RBI would continue to conduct OMOs after repo borrowings by banks dropped to 854.25 billion rupees from 1.04 trillion rupees on Monday, and as the rupee gained for a third session on Monday, recovering from last week's record lows against the dollar.
"The market has been quiet, and all is dependant on whether or not there is an OMO this week," said Sandeep Bagla, senior vice president with ICICI Securities Primary Dealership.
"There is a lot of intervention happening in the bond market. Possibly the RBI is trying to provide liquidity and support to bonds," he added.
The benchmark 10-year bond yield ended steady at 8.51 percent. It moved in a band of 8.50 to 8.53 percent during the day.
Total volumes on the central bank's platform stood at a moderate 100.90 billion rupees.
Traders said they broadly expect the 10-year bond yield to hold in a 8.45 to 8.55 percent range over the week, especially ahead of the gross domestic product data due on Thursday.
Signs of more fiscal consolidation, especially if the government opts to raise fuel prices such as diesel, could help spur gains in bond prices, according to traders.
However, that was in doubt after India's oil minister said on Monday the country has no immediate plans to raise the retail prices of diesel, kerosene and cooking gas, days after a move to raise petrol prices prompted a backlash on the government.
India's benchmark five-year OIS rate closed down 1 basis point at 7.47 percent while the one-year OIS rate ended 3 bps lower at 7.97 percent.
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