January 29, 2013 / 2:57 AM / 5 years ago

MARKET EYE-India bond yields seen little changed ahead of poicy

* India's benchmark 10-year bond yield, which
closed at 7.86 percent on Monday, is seen moving in a tight band
ahead of the central bank's policy review decision at 0530 GMT.
* Most analysts expect the central bank to cut key rates by 25
basis points. 
* The 10-year bond yield is seen dropping by 2-5 basis points if
the RBI delivers a 25 bps cut, but the future guidance would be
of key significance. A 50 bps cut, which is seen highly
improbable, can cause a 10-15 bps drop in yields, traders say.
* However, if the RBI refrains from cutting rates, the 10-year
yield may rise by 10-15 bps moving back above the 8 percent
* Some traders are also expecting the central bank to announce a
cut in the held-to-maturity ratio for banks.
* The 10-year is seen moving in 7.83 to 7.88 percent band until
the rate decision.


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