MUMBAI, Jan 17 (Reuters) - Indian government bond yields were marginally higher in early session on Tuesday as traders awaited details on supply through the sale of debt from states.
The benchmark 10-year yield was at 7.3412% as of 10:00 a.m. IST, after closing higher at 7.3283% on Monday, the second consecutive session of rise.
Bond yields would remain in a thin range as there were no strong triggers, and since the quantum of state debt supply had again undershot the calendar, it would not lead to any major move, a trader with a primary dealership said.
Four Indian states aim to raise 67 billion rupees ($818.92 million) through the sale of bonds against the planned 220 billion rupees, the second straight week of below-scheduled borrowing.
States may not borrow as much as the record 3.41 trillion rupees in the January-March quarter, analysts had said after the release of the state debt calendar for this quarter.
States' finances are expected to improve in 2022-23 with the consolidated gross fiscal deficit to gross domestic product ratio seen falling to 3.4% from 4.1% for the previous year, the Reserve Bank of India said on Monday.
"The fiscal health of the states has improved from a sharp pandemic-induced deterioration in 2020-21 on the back of a broad-based economic recovery and resulting high revenue collections," the central bank said in the annual State Finances Report.
Traders would also keep an eye on the movement in oil prices, after the recent spike in the benchmark Brent crude contract pushed it above the $85-per-barrel mark on bets of improvement in fuel demand from China.
The next major trigger would be the Union budget due on Feb. 1, when the borrowing programme for the next financial year would take centrestage.
The government to gross borrow 15.80 trillion rupees with a fiscal deficit target of 5.9%, according to ANZ Research.
($1 = 81.8150 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Sohini Goswami)
