INDIA BONDS-India bond yields little changed before state debt sale, inflation data

By Dharamraj Dhutia MUMBAI, April 11 (Reuters) - Indian government bond yields were largely unchanged in the early session on Tuesday, as traders await state debt sales later in the day as well as inflation data due on Wednesday. The 10-year benchmark 7.26% 2032 bond yield was at 7.2350% as of 10:00 a.m. IST, after closing at 7.2313% on Monday. Indian states aim to raise 58 billion Indian rupees ($707.53 million) through the sale of bonds, with the quantum sharply lower than the scheduled 225 billion rupees. "Since it is the beginning of a new fiscal year, states' borrowing may tilt to the lower side, but they should pick up from next month onwards," a trader with a state-run bank said.

The major focus would be on the retail inflation data from India and the U.S., both due on Wednesday.

The U.S. consumer price inflation data would be the last one before the Federal Reserve's policy decision on May 3. It will play a pivotal role in the Fed's rate hike decision, with the odds of a 25-basis point (bps) hike rising to over 70%. India's consumer inflation likely eased in March to 5.80%, thanks to softer food price rises, dipping below the Reserve Bank of India's (RBI) upper tolerance limit of 6% for the first time in 2023, a Reuters poll of economists found. Last week, the RBI surprised markets by holding its key interest rate steady at 6.50% after six consecutive hikes when most expected a 25-bps rise, leading to bond yields plunging. However, bond yields remained largely rangebound on continued profit booking from state-run banks, even as the market shifted focus to inflation data. Traders will also remain focussed on the central government's debt sale. New Delhi aims to raise 390 billion rupees via the sale of bonds, which includes new three-year and seven-year bonds.
($1 = 81.9750 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)