2012.06.04 06:04:43 MARKET TALK: Indian Govt Bonds Up; More Room To Cut Rates-Traders

0404 GMT [Dow Jones] Indian government bonds are higher, reflecting the upbeat sentiment among traders on anticipation of more monetary policy easing after the RBI deputy governor says sluggish growth and lower crude prices give it more headroom to manoeuvre monetary policy, say traders. The benchmark 8.79% 2021 bond is at INR102.91 vs INR102.70 Friday. The central bank could trim banks' mandatory cash holding ratio to ease liquidity and support credit growth, or it could slash its key lending rate. "Given the fantastic rally in bonds in the past three sessions, there is going to be profit-booking but most participants are positioned anticipating further softening in rates," a trader with a state-run bank says. The market now focuses on an INR150 billion bond sale, details of which will be announced later today. Yields may harden a bit mid-June as liquidity among banks may be pressured for advance tax payment. The 2021 bond is tipped in a 8.35%-8.39% band in the session vs 8.37% last. (khushita.vasant@dowjones.com) Contact us in Singapore. 65 64154 140; MarketTalk@dowjones.com (END) Dow Jones Newswires June 04, 2012 00:04 ET (04:04 GMT)