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By Dharamraj Dhutia<\/p>\n
MUMBAI, Jan 2 (Reuters)<\/span> – <\/span>Indian government bond yields rose on the first trading session of 2023, with the benchmark bond yield jumping to its highest level in nearly two months after states announced a bigger-than-expected borrowing schedule for the March quarter.<\/p>\n The benchmark 10-year yield IN072632G=CC<\/span> was at 7.3435% as of 10:00 a.m. IST on Monday, after ending at 7.3277% on Friday.<\/p>\n It had hit 7.3534% earlier in the day, the highest since November 10.<\/p>\n Elevated state borrowing was pushing yields upwards, a trader with a primary dealership said.<\/p>\n “Looking at the current scenario, the new trading range for the 10-year bond yield may shift upwards to 7.30%-7.40%.”<\/p>\n The yield eased for the second consecutive quarter in October-December, but jumped 87 basis points in 2022, its biggest such move since 2009.<\/p>\n Indian states plan to raise 3.41 trillion rupees ($41.28 billion) by selling bonds in 13 weekly auctions between January and March. The supply is sharply higher than market expectations of 2.70 trillion rupees to 3.00 trillion rupees.<\/p>\n States had borrowed 4.57 trillion rupees between April and December, lower than the scheduled 6.55 trillion rupees, and a sudden spike in issuance may see crowding out in the last quarter of the financial year, traders have said.<\/p>\n Trading activity<\/span> was unlikely to pick up strongly in the next few sessions, after December witnessed the lowest daily average volume since March.<\/p>\n Inflation eased below 6% in November for the first time in eleven months but core inflation continued to remain above 6%, which, market participants expect, may force the central bank to opt for one more rate hike in February.<\/p>\n The Reserve Bank of India raised repo rate by 225 basis points in 2022 to 6.25% to fight inflationary pressures.<\/p>\n ($1 = 82.6000 Indian rupees)<\/p>\n (Reporting by Dharamraj Dhutia Editing by Nivedita Bhattacharjee)<\/p>\n