Indian Bonds Rise as Oil Prices and US Yields Fall

Indian government bonds rose on Tuesday as oil prices and US Treasury yields fell for a third consecutive day. This lifted investor appetite ahead of a key state debt auction, with traders watching cutoffs at states' 181 billion rupees ($1.89 billion) debt sale later in the day for demand signals and room for yields to fall further.

Bond yields move inversely to prices, so as they rise, bond prices tend to drop. The benchmark 6.94 per cent 2036 bond yield traded at 6.7613 per cent at 10:30 a.m. IST after settling at 6.7739 per cent on Monday.

State-run banks sold 33.7 billion rupees of bonds on Monday to book profits, while demand from foreign lenders and offshore investors remained strong. Offshore investors bought 4.83 billion rupees of bonds under the fully accessible route on Monday, following their biggest one-day selloff in four months on Friday.