Despite some bullishness globally from easing U.S. yields, local factors may turn unfavourable for the local yield levels to sustain at current levels, the trader said.
Apart from the large debt auction, the borrowing meeting and calendar for April-September due this week will drive the markets in a holiday-truncated week, the trader added.
Indian states aim to raise at least 407.14 billion rupees ($4.94 billion) through the sale of bonds on Tuesday - 70% higher than the planned schedule and also highest ever by states for a single auction, according to traders.
States have raised 7.17 trillion rupees through the sale of bonds in the current financial year, while the central government has raised 14.21 trillion rupees via this route.
The Indian government's borrowing for April-September is likely to be between 55% and 58% of its gross annual borrowing target of 15.43 trillion rupees, government officials had told Reuters earlier this month. The government is likely to meet central bank officials to discuss a plan later in the day, and the calendar is likely to by end of this week. The Reserve Bank of India's monetary policy decision is due on April 6, and many market participants expect the central bank to go for one more 25 basis point (bps) hike before embarking on a prolonged pause, as inflation stayed elevated.
The RBI has raised the repo rate by 250 bps to 6.50% in the current financial year. KEY INDICATORS: ** Brent crude futures contract was down 0.2% at $74.80 per barrel after easing 1.2% in the previous session ** 10-year U.S. Treasury yield was at 3.3799% and two-year note was at 3.7897% ($1 = 82.3340 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Nivedita Bhattacharjee)
