However, foreign institutional investors have almost reached the limit of debt they can buy, and a failure to increase it would mean India could miss out on any further flows. Foreign funds have bought debt worth around $17 billion so far this year. Although the new GDP data is encouraging, we need to see more signs that the government is boosting its revenue and a commitment that inflation will be brought under control, said Dwijendra Srivastava, head of fixed income at Sundaram Asset Management Company in Mumbai. The 10-year bond may still hover around these levels and data on inflation will be watched.
The 2024 10-year bond yield, which became the benchmark last month, fell 1 basis point to end at 8.55%. In the overnight indexed swap market, the benchmark five-year swap rate ended 2 bps lower at 8.02% and the one-year rate ended steady at 8.45%.
Volumes were sluggish after the long weekend.