Indian bonds gain after RBI signals shift to growth

MUMBAI Tue Dec 18, 2012 11:17am IST

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MUMBAI Dec 18 (Reuters) - Indian bond prices gained on Tuesday after the Reserve Bank of India kept both interest rates and the cash reserve ratio unchanged as the central bank signalled a shift to focus on growth, raising expectations for a rate cut as early as January.

The 10-year bond yield fell 3 basis points to 8.14 percent from levels before the decision after initially gaining 1 bp.

The RBI's decision to also keep the cash reserve ratio on hold has raised expectations for more bond purchases via open market operations.

However, the BSE stock index fell 0.2 percent as of 0538 GMT. Banks were among the leading decliners, with State Bank of India down 1.8 percent. (Reporting by Mumbai markets team)

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