Indian bond yields seen lower; state loan sale eyed

MUMBAI, Nov 24 (Reuters) - Indian federal bond yields should drop on Tuesday with sentiment boosted by lower U.S. treasury yields and the absence of a federal debt sale this week, but sporadic profit taking is expected.

* The yield on the 10-year benchmark bond IN069019G=CC closed at 7.22 percent on Monday, off a high of 7.23 percent and above its Friday's close of 7.18 percent, which was its lowest since since Oct. 8. The yield dropped 14 basis points last week.

* U.S. Treasury debt prices edged higher on Monday as strong year-end demand overshadowed a flight to riskier assets as well as decent results for a $44 billion auction of two-year notes. [US/]

* Absence of a federal debt sale this week is seen as bullish and traders said the market could absorb the remaining 640 billion rupees ($13.8 billion) of government bonds scheduled to be sold over the rest of the fiscal year to March.

* The central bank will auction 67.16 billion rupees worth of state loans on Tuesday and 70 billion rupees of treasury bills on Wednesday. ($1 = 46.5 Indian Rupees) (Reporting by Swati Bhat; Editing by Ranjit Gangadharan) ((swati.bhat@thomsonreuters.com; +91-22-6636-7353; Reuters Messaging: swati.bhat.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))