The Indian long-term bonds modestly firmer on Monday after weak April manufacturing PMI figure. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved down 0.07 pct to 7.432 pct, the yield on the 15-year bonds, dipped 0.76 pct to 7.868 pct and the yield on the 30-year bond dipped 0.06 pct to 7.166 pct by 0748 GMT.
The India’s manufacturing PMI fell to 50.5 (4-month low) in April, as compared to 52.4 in March. In addition, the India’s Wholesale price index (WPI) fell 0.85 pct y/y, from down 0.91 pct in February, pressurised by weak international oil prices and manufactured goods. Meanwhile, India's finance minister Jaitley said that inflation is expected to decline further and inflation for FY16 is seen at 5.5%.
“The central bank is expected to keep the policy on hold through this year, but might lower rate one last time if monsoon rains are favourable enough to keep food inflation sustainably lower and growth continues to be weak”, ANZ added in its April report.
Lastly, we foresee that Indian government bonds are likely to gain, as investors may buy notes on expectations that the Reserve bank of India may go for further monetary easing in 2016.
Meanwhile, Sensex fell 0.54 pct or 137.81 points to 25,468.81 and Nifty-50 futures tumbled 0.73 pct or 57 points to 7839.50 by 0825 GMT.
The material has been provided by InstaForex Company – www.instaforex.com