Bond yields up, Re falls

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Nov 17: India's bonds fell for the first time in four days on speculation yields near the lowest in nine months will damp demand for the securities.

Banks and securities companies may have scaled back investments after benchmark 10-year yields fell the most in three weeks on November 14 to the lowest since February. Bonds also fell as some investors sold the securities to gain from an increase in prices, said Anoop Verma, a debt trader in Mumbai at Development Credit Bank Ltd.

"Yields fell quite sharply in recent days and so the market's consolidating now," Verma said. "There's some profit- taking because prices gained significantly on Friday."

The Indian currency dropped 0.7% to 49.345 per dollar at the close.

The yield on the 8.24% note due April 2018 added 4 bps to 7.51%, according to the central bank's trading system.

Benchmark 10-year yields may rise as high as 7.55% in the coming days, Verma said. They have fallen by more than 2 percentage points from a seven-year high of 9.56% percent reached in July. Bonds also fell on concern demand for the securities will weaken as India's federal and state governments sell more debt. Five Indian states plan to sell a total of Rs 4,850 crore of 10 year debt on November 20, the central bank said.

The federal government sold Rs 10,000 crore of debt on November 14.