Bond Bulls Raise a Toast as RBI Signals More Debt Purchases

(Bloomberg) -- Volumes in India's government bonds surged to the highest in more than a year, reflecting a revival of bullish spirits in a market emerging from a yearlong selloff, after the central bank signaled it may keep buying debt for four more months.

Turnover surged to 883 billion rupees ($12.4 billion) on Wednesday, the highest since June 2017, as the Reserve Bank of India added to the cheer by cutting its inflation projection at its policy review. The benchmark yield slid to a new eight-month low of 7.41 percent at 11:30 a.m. in Mumbai.

“The yield may fall as low as 7 percent if oil prices remain low,” said Mahendra Jajoo, the head of fixed income at Mirae Asset Global Investments in Mumbai. “The outlook is very bullish.”

The plunge in oil prices, the bugbear for the nation's trade deficit, from a four-year high reached in October along with the RBI's debt-buying support, have turned the tide in the nation's bond market that had bled for five quarters amid concerns of the government missing its budget targets.

Benchmark 10-year bonds are now set for their first quarterly advance since June 2017.

--With assistance from Shikhar Balwani.

To contact the reporter on this story: Kartik Goyal in Mumbai at kgoyal@bloomberg.net

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Anto Antony, Ravil Shirodkar

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