Comments
Indian government bond yields are expected to dip marginally in early trade on Monday as core inflation likely eased in December, even as headline retail inflation rose.
The 10-year benchmark bond yield is expected to move in the 7.14 per cent-7.19 per cent range till the debt auction, following its previous close at 7.1791 per cent, a trader with a primary dealership said.
"Though there is no major surprise in the headline inflation numbers, constant easing in core inflation figures would be taken as a positive development by the market, and we could see some activity from bulls today," the trader said.
India's annual retail inflation rose at the fastest pace in four months in December, driven by a rise in prices of some food items, as the reading stood at 5.69 per cent from 5.55 per cent the previous month, while a Reuters poll had forecast a rate of 5.87 per cent
Core inflation, which strips out volatile food and energy prices, was estimated to be 3.8 per cent-3.89 per cent in December, compared with 4.05 per cent-4.2 per cent in November, according to two economists.
The January retail inflation estimate is tracking at sub 5 per cent, as the impact of adverse base wanes and food inflation moderates, IDFC First Bank said.
"Core inflation is expected to continue to soften to 3.6% in January versus 3.9 per cent in December, with input cost pressures remaining moderate. For the full year FY24, we maintain CPI inflation estimate at 5.4 per cent and FY25 at 4.5 per cent," the private bank added.
- Also read: Understand compound returns
The Reserve Bank of India's (RBI) monetary policy committee left the benchmark repo rate unchanged at 6.50 per cent for five consecutive meetings and with inflation remaining above the central bank's target, monetary policy could remain in "restrictive territory", the RBI said in a report last month.
Meanwhile, U.S. yields eased last week, after December producer prices data fell unexpectedly, raising bets of an early interest rate cut by the Federal Reserve. The 10-year yield eased to 3.95 per cent on Friday, down 9 bps last week, after rising 18 bps in the first week.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.