By Dharamraj Dhutia
MUMBAI, Feb 2 (Reuters) - Indian government bond yields
hit their lowest in seven weeks on Thursday, following U.S
peers, after markets read comments by Fed chair Jerome Powell as
dovish, helping global sentiment.
The benchmark 10-year yield was at 7.2624% as
of 10:00 a.m. after closing down at 7.2774% on Wednesday,
following the federal budget presentation.
It has dropped 12 basis points (bps) in the last two
sessions and posted its biggest single-session fall in two
months on Wednesday.
"Sentiment has turned largely bullish as there are not many
negatives to take the yields higher," said a trader with a
private bank, adding that while the fall in U.S. yields was
helping, there would be some resistance around 7.25%-7.26%
levels.
The 10-year U.S. yield eased below 3.40% on Wednesday after
the Federal Reserve raised interest rates by 25 bps to the
4.50%-4.75% band.
The Fed policy will be followed by the Reserve Bank of
India's decision on Feb. 8, when it is widely expected to hike
repo rate by 25 bps to 6.50%.
Nomura said the RBI will likely view the budget in a
positive light and as growth supportive, owing to an increased
public capex and directional fiscal consolidation with low risk
for generating fresh inflationary pressures.
"We believe the RBI is at the end of its policy tightening
cycle and expect a final 25 bps hike in February policy
meeting," it said.
Bond yields dropped on Wednesday after the government said
it aimed to gross borrow 15.43 trillion rupees ($188.60
billion)through the sale of bonds in 2023-24, while keeping the
net borrowing at 11.81 trillion rupees.
A Reuters poll had pegged the gross borrowing at 16 trillion
rupees.
Bond market sentiment also remained supported on the
government's sale of 120 billion rupees of a new 10-year paper
on Friday, replacing the existing benchmark in the coming weeks.
($1 = 81.8150 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
