November 8, 2012 / 12:21 PM / 5 years ago

India bonds flat in thin volume; key macro data awaited

* 10-yr bond yield ends flat at 8.19 pct
    * Repo bids rise to highest in six sessions
    * Inflation, IIP data next week key - traders

    By Archana Narayanan
    MUMBAI, Nov 8 (Reuters) - India's federal bond yields ended
flat on Thursday in choppy trading, with the market likely to
remain rangebound ahead of a holiday-shortened week peppered
with key macroeconomic data.
    India will report next week factory data for September and
wholesale inflation data for October, which will be the first
important data points since the central bank kept rates steady
last week.
    The central bank has, however, indicated that it is unlikely
to ease monetary policy further until January, thereby reducing
the possibility of an impact of the data on bonds unless the
data throws up a major surprise.
    "The inflation data will be closely watched as its
trajectory will determine the timing of rate cut, be it in
December, January or later," said Harish Agarwal, a fixed income
trader with First Rand Bank.
    The benchmark 10-year bond yield flat at
8.19 percent, after trading in an 8.18-8.19 p ercent range during
the day.
    Trading volumes were at 129.3 billion rupees ($2.39
billion), half that of a usual session, and are likely to remain
thin in the coming week given that it will be cut short to three
trading sessions due to public holidays.
    Bond dealers are also closely watching cash conditions with
rising swap rates indicating liquidity may tighten in the days
ahead.
    Repo bids with the central bank rose to 796.2 billion
rupees, its highest in six sessions.     
    Agarwal expects the central bank to resume open market
operations in the week following Diwali, a local festival during
which the demand for cash goes up.
    India's 1-year OIS rate was flat at 7.77 
p ercent while the benchmark 5-year OIS rate fell
1 basis point to 7.13 percent.
($1 = 54.0650 Indian rupees)

 (Editing by Jijo Jacob)

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