October 7, 2013 / 7:11 AM / 4 years ago

MARKET EYE-Indian bond yields trading flat as OMO outcome eyed

* Indian benchmark government bond trading
unchanged at 8.61 percent ahead of the outcome of the RBI's
planned OMO bond purchase of up to 100 billion rupees ($1.6
billion). 
* A Reuters poll shows RBI may end up buying only about 60
billion rupees of bonds. 
* Traders say yields may fall as much as 5 bps if the central
bank buys back more than currently expected. 
* Dealers say mutual funds holding large positions in 7.17
percent 2015 bonds may look to sell, while banks are seen keen
to sell 8.20 percent 2025 bonds.
* "The holding cost of the illiquid bonds such as 2015 is
higher, and mutual funds would want to sell off these bonds,"
said a trader with foreign bank.    

 (neha.dasgupta@thomsonreuters.com/
neha.dasgupta.thomsonreuters.com@reuters.net)

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