The data reinforced expectations the RBI would keep interest rates on hold at its April 1 policy review after tightening monetary policy by 75 basis points from September to January. Still, traders said the expectations about easing inflation have been largely priced into bonds, with benchmark 10-year yields down 12 bps so far this month.
We possibly saw the unwinding of some positions taken in the run-up to the CPI data, said Killol Pandya, a senior fund manager-debt at LIC Nomura Mutual Fund.
The benchmark 10-year bond yield rose 2 basis points to 8.738%. It fell to 8.68% earlier in the session, a level last seen on February 6. Volumes were average at R236.25 billion.
In the overnight indexed swap market, the benchmark five-year swap rate closed 1 bp lower at 8.44% while the 1-year rate also ended 1 bp down at 8.64%