Indian benchmark bond yield sees stiff resistance around 7%

Indian government bond yields traded marginally lower on Tuesday as domestic inflation eased, although traders say that the benchmark is seeing stiff resistance at around the 7% mark.

The 10-year benchmark 7.26% 2033 bond yield was at 6.9916% as of 10:00 a.m. IST, after closing at 7.0062% in the previous session.

“At the current levels, most of the positives are factored in, and we would need fresh aggressive buying for the 7% handle to be comfortably taken,” a trader with a private bank said.

Bond yields dipped after India’s retail inflation eased to an 18-month low of 4.7% in April from 5.66% in the previous month, lower than Reuters’ forecast of 4.80% and below the central bank’s upper tolerance limit for the second consecutive month.

Even though some economists say that retail inflation in May is likely to fall further towards 4%, a level last seen in January 2021, bond traders say the market needs stronger triggers for yields to fall.

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