Indian traders cheer RBI for cancelling bonds sale


MUMBAI • Bond traders in India seem happier by the central bank’s decision to cancel its sale of bonds than with last Friday’s upgrade of the nation’s credit rating by Moody’s Investors Services Inc for the first time in 14 years.

Sovereign bonds advanced the most in six months yesterday after the Reserve Bank of India (RBI) last Friday scraped its decision to sell up to 100 billion rupees (RM6 billion) of bonds on Nov 23.

The yield on the benchmark 10-year bond fell as much as 14 basis points.

Yields slid as much as 13 basis points in reaction to Moody’s move, but the euphoria fizzled out as concerns over rising inflation and fiscal discipline — reasons that have put bonds on course for a fourth monthly loss — resurfaced.

“Market jitters probably prompted the RBI to cancel the OMO sales, which is contributing to the relief rally,” Anoop Verma, VP for treasury at DCB Bank in Mumbai, said referring to the sale under the central bank’s open-market operations.

Bonds have come under pressure recently as surging oil prices have stoked concerns about faster inflation and dashed hopes of an interest-rate cut by the RBI.