Indian bond yields decrease as attention shifts to US following Modi’s weaker mandate | Finance News

Indian government bond yields dipped as the market shifted its focus to US bond yields and oil prices following Prime Minister Narendra Modi’s smaller victory margin for a third term. The benchmark 10-year yield was at 7.0183 per cent as of 10:00 am IST, lower than its previous close of 7.0272 per cent.

The market reacted to the recent fall in US yields and oil prices, with traders keeping an eye on any potential issues in cabinet formation that could impact bond yields. US yields continued to decline on weaker-than-expected job growth data, raising expectations of two rate cuts by the US Federal Reserve this year.

In India, the Modi-led ruling Bharatiya Janata Party fell short of a simple majority in the 543-member house, winning 240 seats. An alliance led by Modi secured 293 seats, much lower than predicted in exit polls. Foreign fund managers noted that Indian government bonds will still attract foreign flows despite the narrower victory margin.

The central government is set to conduct its fifth buyback for the current financial year, with expectations of moderate offers. The Reserve Bank of India’s monetary policy decision is due on Friday, with most market participants anticipating no change in rates or stance, but focusing on guidance.

Overall, the market is closely monitoring developments in the US and India, with bond yields and oil prices playing a significant role in shaping investor sentiment.