Indian bonds fell on Friday, snapping an eight-session winning streak, while the new 7.16 percent 10-year bonds also reeled after Standard & Poor's reiterated its "negative" outlook on the country's sovereign ratings. S&P warned India on Friday of the need to follow through on reforms, dealing a blow to a government that had recently pitched for an upgrade from the country's current "BBB-minus" rating, or one notch above junk.
The new 10-year 7.16 percent 2023 bond sharply retreated after the S&P statement, closing at 7.16 percent after falling to as low as 7.09 percent immediately after the auction. "Market is consolidating at these levels after a 7-8 day movement in one direction," said Hitendra Dave, head of global markets at HSBC India in Mumbai.
The 10-year benchmark bond ended up 1 bp at 7.40 percent, after falling as low as 7.32 percent earlier in the session, the lowest yield since December 6, 2009, according to Thomson Reuters data. Yields fell 19 basis points for the week, marking the 10-year bond's best performance since the first week of July 2012.
The new 10-year bond 2023 is expected to trade in a 7.15-7.18 percent band, while the 10-year benchmark 2022 bond is seen in a 7.38-7.43 percent range. The total volume reported on the CCIL platform was 927.90 billion rupees, below the daily average volumes of 1.06 trillion rupees reported this week.