INR 320bn Auction Eyed

Bonds are expected to come under pressure in early trade on some auction concession and disappointment that the RBI did not announce any purchase operations for next week. Markets await the results of an INR 320bn bond sale later in the session. There is a chance that the sale could be left to primary dealers; last time out the auction of the 5.63% 2026 bond had INR 28bn devolved to primary dealers, while last week's sale saw the RBI devolve the whole INR 140bn 5.85% 2030 bond sale on primary dealers. Meanwhile the RBI did announce plans to hold an INR 2tn 14-day reverse repo operation today.

• Elsewhere, data from Barclays shows that foreign investor holdings of Indian debt declined at a faster pace in June and demand is expected to remain muted in the short term. Foreign holdings of Indian fixed-income assets fell INR34.1b in June, accelerating from INR19.2b of outflows in May, government bond holdings were up INR7.3b in June.