0400 GMT [Dow Jones] India government bonds are trading lower as the
market expects the central bank to hold rates steady at its monetary
policy review on Tuesday, says a senior dealer with a privately-run
bank. The benchmark 8.15% 2022 bond is trading at 100.16 compared with
100.19 at Friday's close. "The 10-year paper appears overvalued given
the market sentiment and there would be some selling pressure. It
could intensify if the Reserve Bank of India gives a hawkish view on
the economy. Till then, it will be in a narrow rangebound trade," he
says. He tips the yields on the 10-year to be in a 8.12%-8.17% band in
the session compared with 8.13% now. "It may test 8.25% if the RBI's
tone is hawkish," he says. The RBI is likely to maintain its key
policy rate at 8.0% at its rate-setting meeting Tuesday to guard
against higher inflation. Fourteen of the 15 economists polled by Dow
Jones expect no change in the rate, while one tips a 25-bp reduction.
(nupur.acharya@dowjones.com)
Contact us in Singapore. 65 64154 140; MarketTalk@dowjones.com
(END) Dow Jones Newswires
July 30, 2012 00:00 ET (04:00 GMT)
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