MUMBAI, Jan 10 (Reuters) - Indian government bond yields are expected to trend marginally lower in opening trades on Wednesday, as underlying sentiment remains supported after a proposal to include bonds on the Bloomberg Emerging Market Local Currency index.
The 10-year benchmark bond yield is expected to trade in a 7.15%-7.20% range, following its previous close at 7.1884%, a trader with a primary dealership said.
"Though the index inclusion bit is not a game changer in terms of the quantum of inflows, it is still a step in the positive direction, which led to a push to below 7.20% on the benchmark," the trader said.
On Monday, Bloomberg Index Services proposed including eligible Indian bonds in its emerging market local currency index from September.
This comes after JPMorgan said it would include India in emerging market debt index from June.
Market participants have pegged inflows from inclusion on the Bloomberg index to the tune of $2 billion to $3 billion.
Foreign inflows into Indian bonds rose to a six-year high in 2023.
Meanwhile, investors' focus remains on inflation prints from the U.S. on Thursday, and India on Friday.
The U.S. consumer inflation reading is seen at 0.2% on-month, while core CPI for 12 months is seen rising at a pace of 3.8%, according to a Reuters poll.
The odds of aggressive rate cuts from the Federal Reserve have come down since the start of the New Year.
Traders also await fresh supply as New Delhi will raise 330 billion rupees ($3.97 billion) through the sale of bonds on Friday, which includes 160 billion rupees of the benchmark paper. KEY INDICATORS: ** Brent crude futures 0.5% higher at $78 per barrel, after rising 1.9% in the previous session ** 10-year U.S. Treasury yield at 4.0190%, two-year yield at 4.3600% ** RBI to auction Treasury bills worth 270 billion rupees
($1 = 83.1130 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala)
