MUMBAI, March 27 (Reuters) - Indian government bond yields are expected to trend largely unchanged on Wednesday, as traders may avoid taking heavy positions before the end of the financial year, while a recovery in the rupee also calmed nerves.
The benchmark 10-year yield is likely to trend in a 7.07%-7.11% range after closing at 7.0908% on Tuesday, a trader with a private bank said.
Indian markets were shut on Monday and will be closed on Friday for public holidays.
"Most traders are already positioned for the fiscal close, and hence, we may not see any major moves today as well as tomorrow, unless there is a repeat depreciation in the currency or a jump in Treasury yields," the trader said.
The rupee is expected to appreciate marginally, extending its recovery from a record low hit on Friday, which had also triggered a sell-off in local debt.
U.S. yields remained steady, with the 10-year yield moving in a narrow 4.20%-4.25% range, as traders found it difficult to assess the timing and extent of rate cuts from the Federal Reserve in 2024.
Market participants in India now await the borrowing calendar for the first half of the next financial year, which should be detailed before the end of this week.
India aims to gross borrow 14.13 trillion rupees via debt sale in the next financial year, after borrowing a record 15.43 trillion rupees in the current financial year.
Traders will also keep an eye on borrowing by states after their fundraising crossed 10 trillion rupees for the first time ever on an annual basis this fiscal.
States are likely to gross borrow a record 11.1 trillion rupees in the next financial year starting April, according to ICICI Securities Primary Dealership.
KEY INDICATORS: ** Brent crude futures 0.9% lower at $85.50 per barrel, after easing 0.6% in previous session ** Ten-year U.S. Treasury yield at 4.2356%, two-year yield at 4.5806% ** RBI to auction Treasury bills worth 340 billion rupees ($4.08 billion) ($1 = 83.3230 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Subhranshu Sahu)
