News

By Dharamraj Dhutia

MUMBAI, Sept 29 (Reuters) - Indian government bond yields are expected to trade largely unchanged on the last day of the fiscal first half after a recent selloff, as oil prices and U.S. yields stay elevated, while FTSE Russell continues to keep India on a watch list for inclusion.

The 10-year benchmark 7.18% 2033 bond yield IN071833G=CC is likely to be in the 7.20%-7.26% range on Friday, after ending at 7.2414% in the previous session, a trader with a private bank said.

The benchmark yield posted its biggest single-session rise for 2023 on Thursday.

Global index provider FTSE Russell kept India on a watch list for inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI), the index provider said on Friday, which does not come as a surprise for many market players.

The move comes a week after JPMorgan JPM.N announced India will be a part of its influential GBI-EM index suite starting in June.

"Euroclear settlement is important for FTSE, and hence this announcement does not come as a major surprise, but still may have a mild negative impact going into the quarter end," a trader with a foreign bank said.

U.S. yields were marginally off their highs, with the 10-year yield at 4.60%, after rising to 4.6880% on Thursday - its highest level in 16 years - as bets of interest rates remaining higher for longer persisted.

The benchmark Brent crude contract was trading above $95 per barrel, but was below one-year highs of $97.69 per barrel hit on Thursday, while worries over supply shortage continue to pose an upside threat to prices.

Meanwhile, India to borrow 6.55 trillion rupees ($78.82 billion) through bond issues in the October-March half. This includes a maximum of 1.45 trillion rupees through 10-year bonds, which is 22% of the overall borrowing.

KEY INDICATORS:

** Brent crude futures LCOc1 were 0.1% higher at $95.45 per barrel, after easing 1.2% in previous session

** 10-year U.S. Treasury yield US10YT=RR at 4.5994%, two-year yield US2YT=RR at 5.0890%

($1 = 83.1020 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)

((Dharamraj.dhutia@tr.com))

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