India’s 10-year benchmark bond yield has risen for four straight quarters for the first time since December 2011.
The yield rose by 50 basis points in the quarter ended June. It briefly breached 8 percent earlier this June, the highest in three years, after the Reserve Bank of India increased the repo rate by 25 basis points to 6.25 percent. On Monday, the 10-year yield was steady at 7.895 percent at 3.30 p.m. compared with its Friday’s close.
Foreign portfolio investors and public-sector banks are “not really present in the bond market”, Lakshmi Iyer, chief investment officer, fixed income and head, products at Kotak Asset Management, said. Overseas investors have sold close to Rs 39,000 crore worth of debt so far this year, pushing yields higher, according to Iyer.
Iyer said yields may come down a bit but she doesn’t see sustained softening. They are likely to remain at elevated levels due to inflationary pressures and expectation of a rate hike by the RBI in August, she said.