Bond yields edged higher tracking weakness in the rupee and a jump in crude prices. Investors, however, will be wary of taking large bets ahead of the upcoming first-half of borrowing schedule due to be released later this week. Sentiments also remain wary ahead of the central bank's monetary policy review on April 1, 2014 where it is widely expected to keep rates on hold.
On the currency front, Indian rupee is consolidating after surging to its more than eight-month high in last session. Rupee weakened as state-run banks were seen buying dollars presumably on behalf of the Reserve Bank of India (RBI). Dollar buying by oil marketing companies to meet their month-end demand, too was weighing down the rupee.
On the global front, US Treasury debt prices extended gains on Wednesday after the government sold $35 billion in new five-year notes amid very strong demand from fund managers and other investors. Meanwhile, Brent crude held steady around $107 a barrel on Thursday as investors took stock of comments by U.S. President Barack Obama hinting at tougher economic sanctions against Russia, including in the energy sector.
The yields on new 10 year Government Stock 2023 were trading 1 basis point higher at 8.79% from its previous close of 8.78% on Wednesday.
The benchmark five-year interest rate swaps were trading 2 basis points lower at 8.47% from its previous close of 8.49% on Wednesday.
Indian finance ministry officials are due to meet officials at the RBI on March 28, 2014 to finalise the government's borrowing calendar for the April-September period.