Indian government bonds rally as crude prices fall
Falling Brent crude prices have revived demand for Indian bonds as traders look toward US midterm elections for global economic clues.
Indian government bonds rallied early on Monday as falling crude prices revived demand, according to the Economic Times.
Brent crude futures slid 3.2 per cent to $109.75 a barrel in Asian trade. This follows a third day of talks between Iranian officials and Qatari mediators aimed at ending the US-Israeli war on Iran.
The benchmark 6.94 per cent 2036 bond yield fell approximately 5.5 basis points to 7.3612 per cent by 11:30 a.m. IST. The rupee also strengthened 0.08 per cent to 94.87 per US dollar.
Gopal Tripathi, head of treasury and capital markets at Jana Small Finance Bank, said the market is finding strength as crude and the rupee behave well.
Lower crude prices can ease inflation, current-account, and fiscal pressures for India, which is the world's third-largest oil importer and consumer. This may also temper expectations of aggressive tightening by the Reserve Bank of India (RBI).
Traders are now focusing on the US midterm elections to gauge if results alter prospects for a ceasefire and oil-price correction. A private-bank trader noted a risk of a 50-basis-point December hike if inflation remains elevated.
