(Reuters) - Indian government bond yields rose on Friday as a higher-than-expected cut-off on the benchmark bond at the weekly auction disappointed traders, leading to selling pressure towards the end of the session.
The benchmark 10-year government bond yield ended 5 basis points (bps) higher at 7.3012% after closing at 7.2548% on Thursday. It ended this week on a steady note.
Benchmark bond prices went further down after the auction results, much lower than the market poll. The benchmark is also facing resistance at the 7.25% level, said Pawan Somani, head of fixed income at Knight Fintech Research.
The Reserve Bank of India (RBI) set the cut-off yield for the benchmark bond at 7.2722% against the 7.25% expected in a Reuters poll.
New Delhi raised 280 billion Indian rupees through the sale of bonds, which were well-bid, according to traders.
The market expected a strong demand at auction on overall bullish sentiment but that didn't happen. Large government banks and mutual funds were largely absent from the market because the current levels are not looking good, said a treasury head at a state-run bank.
The yields, however, were largely supported below the 7.30%-level during the session.
In the coming week, market participants will monitor domestic economic growth data and U.S. jobs data for further cues. The yield is likely to move in the 7.20%-7.35% band till the RBI policy meeting, due on Dec. 7.