MUMBAI: Indian government bond yields were largely unchanged in early trading on Thursday as the market awaited fresh triggers in the form of a further move in oil prices and debt supply on Friday.

The benchmark 10-year yield was trading at 7.3190% as of 10:00 a.m. IST, after ending at 7.3212% on Wednesday. Market needs a very strong positive trigger for the 7.30% level to be broken below that for the benchmark paper, a trader with a state-run bank said.

New Delhi aims to raise 280 billion rupees ($3.38 billion) through sale of bonds, which includes 120 billion rupees of the benchmark paper, on Friday.

Most market participants expect the benchmark bond yield to trade in a narrow range of 7.30%-7.40% for most part of this month ahead of the Union budget.

Apart from the budget announcement, bond yields could react to retail inflation data and changes in oil prices.

Oil prices fell further on Wednesday, with the benchmark Brent crude contract posting its biggest single-day drop in four months.

Investors are worried about fuel demand as the global economy slows and COVID infections spread in China.

Indian bond yields dip tracking similar move in US peers, oil prices

The benchmark contract crashed by 5.2% on Wednesday after falling by 4.4% on Tuesday, posting the steepest percentage loss in the first two trading days of any year for over three decades.

India is one of the largest importers of the commodity and oil prices have a direct impact on retail inflation.

The data for December is due next week and comes after the reading eased below 6% in November, a first in 11 months.

The Reserve Bank of India is mandated to keep inflation around 4%, with a tolerance level of 200 basis points (bps) on either side.

The central bank hiked the repo rate by 225 bps in 2022 to 6.25% in its fight against inflation.