(Reuters) - Indian government bond yields ended little changed in a low-volume session on Monday as most market participants remained on the sidelines ahead of the end of the calendar year.
The 10-year benchmark bond yield ended at 7.3194%, after closing at 7.3179% on Friday.
"Many factors like crude oil, U.S. yields and bets of higher spending in the upcoming budget will continue to weaken appetite for bonds and yields should see an upside bias in the near term," said Gopal Tripathi, head of treasury and capital markets at Jana Small Finance Bank.
Yields were marginally higher earlier in the day as the 10-year U.S. yield rose to 3.75% for the first time in nearly four weeks on bets of more rate hikes in 2023, while the benchmark Brent crude contract gained 10% in the last two weeks, most recently as Russia said it could cut crude output.
Trades worth only around 118 billion rupees ($1.43 billion) took place during the session as of 3:30 p.m. IST, against the daily average of 213 billion rupees last week and 266 billion rupees a week before, CCIL data showed.
Bond trading volume was significantly low as is the usual case during December-end and the absence of long-term investors like banks, pension funds and insurance companies is resulting in muted yield movement, said a trader at a state-run bank.
Investors expect yields to trade in a thin range for the rest of the week due to the lack of major market-moving triggers. Markets will largely take cues from oil prices and U.S. Treasury yields.
Meanwhile, Sudhir Agrawal, executive vice president and fixed income fund manager at UTI Mutual Fund said, India's bond yield curve looks attractive at the shorter end as the interest rate tightening cycle is expected to peak soon, while heavy debt supply in the new year could weigh on the longer end.
