Indian government bond yields dropped to their lowest in nearly three months on Monday, extending their fall after the central bank last week indicated its next move was likely to be an easing of monetary policy as risks to growth increase.
The benchmark 10-year bond yield was down 4 basis points at 8.34 per cent, adding to the 11 bps drop on Friday after the Reserve Bank of India (RBI) kept rates unchanged but signalled a shift in its hawkish policy stance.
"The yield should trade in a 8.00 to 8.25 per cent range in the next few days as the market starts building in rate cut expectations," said Sandeep Bagla, senior vice president at ICICI Securities Primary Dealership.
Total volumes on the central bank's electronic trading platform were sharply higher at 117.45 billion rupees ($2.21 billion), compared with the usual 50 billion rupees usually dealt in the first three hours of trade.
The RBI paused an aggressive tightening cycle that involved lifting rates 13 times since March 2010, as the economy tussles with a worrying combination of weak growth and high inflation.
Demand for bonds was aided by domestic shares that fell more than 1.5 per cent on slowing growth, while lower global oil prices was seen cooling inflation pressures.
Brent crude futures fell below $103 on Monday on worries that Europe's debt woes could trigger a global recession, but losses were limited by signs China's oil demand would hold up as its economy headed for a moderate slowdown.
Traders said the bond market was also underpinned by risk aversion globally on instability fears a leadership transition could bring following North Korean leader Kim Jong-il's death and as investors await more developments and ratings downgrades from Europe.
News bureau,
The benchmark 10-year bond yield was down 4 basis points at 8.34 per cent, adding to the 11 bps drop on Friday after the Reserve Bank of India (RBI) kept rates unchanged but signalled a shift in its hawkish policy stance.
"The yield should trade in a 8.00 to 8.25 per cent range in the next few days as the market starts building in rate cut expectations," said Sandeep Bagla, senior vice president at ICICI Securities Primary Dealership.
Total volumes on the central bank's electronic trading platform were sharply higher at 117.45 billion rupees ($2.21 billion), compared with the usual 50 billion rupees usually dealt in the first three hours of trade.
The RBI paused an aggressive tightening cycle that involved lifting rates 13 times since March 2010, as the economy tussles with a worrying combination of weak growth and high inflation.
Demand for bonds was aided by domestic shares that fell more than 1.5 per cent on slowing growth, while lower global oil prices was seen cooling inflation pressures.
Brent crude futures fell below $103 on Monday on worries that Europe's debt woes could trigger a global recession, but losses were limited by signs China's oil demand would hold up as its economy headed for a moderate slowdown.
Traders said the bond market was also underpinned by risk aversion globally on instability fears a leadership transition could bring following North Korean leader Kim Jong-il's death and as investors await more developments and ratings downgrades from Europe.
News bureau,
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