Indian states aim to raise 207.37 billion rupees ($2.51 billion) through the sale of bonds maturing in seven years to 29 years.
The quantum is lower than scheduled but stays above 200 billion rupees for the fourth time in the last five weekly auctions.
Traders also await the minutes of the Reserve Bank of India's latest monetary policy decision which would be published on Wednesday. The RBI has raised the policy rate for the sixth consecutive time to 6.50%, and kept the door open for more tightening, highlighting core inflation concerns.
Retail inflation in January surprised on the upside, with the reading at 6.52% rising above the RBI's upper tolerance range for the first time since October, further cementing bets that the central bank could hike the rate to 6.75% in April.
The benchmark bond yield is unlikely to move sharply from the current levels and may remain in the 7.25%-7.50% zone despite inflation worries, Ashutosh Tikekar, head of global markets at BNP Paribas India, said.
"There is no reason for the RBI to move (interest rates)
beyond 6.75% unless inflation goes totally out of control. The
market is not positioning for that kind of surprise."
Market participants will also track the movement in the U.S.
yields and oil prices for more triggers.
KEY INDICATORS:
** Brent crude futures up 0.6% at $83.60 per barrel,
after rising 1.3% in the previous session
** 10-year U.S. Treasury yield was at 3.8572%
and the two-year note at 4.6683%
** Indian states to raise 207.37 billion rupees via sale of
bonds
($1 = 82.7220 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
