Nov. 3 (Bloomberg) -- India’s 10-year bonds gained for the fifth time in six days after the central bank last week raised the minimum amount that lenders must invest in less risky debt.

Banks, the biggest buyers of government debt, are probably increasing purchases after the Reserve Bank of India asked them on Oct. 27 to raise debt investments as a proportion of deposits to 25 percent from 24 percent earlier. India’s financial markets were closed yesterday for a holiday.

“The bond market looks better as banks raise holdings to keep up with the new regulation,” said Baljinder Singh, a fixed-income trader in Mumbai at state-owned Andhra Bank.

The yield on the 6.90 percent note due July 2019 decreased seven basis points, or 0.07 percentage point, to 7.23 percent as of the 5:30 p.m. close in Mumbai, according to the central bank’s trading system. The price rose 0.48, or 48 paise per 100 rupee face amount, to 97.75.

Ten-year yields may move between 7.15 percent and 7.35 percent this week, Singh said.

Bonds also rose on speculation investors will increase holdings as government debt sales slow through the remainder of the year. India has 4.51 trillion rupees ($95 billion) of fixed- income securities planned for the fiscal year ending March 2010, and has completed 74 percent of the borrowing program, the central bank said on Oct. 26.

“Supply of government debt is set to ease in the coming months and that’s a positive for the bond market,” Singh said.

The cost of five-year interest-rate swaps, or derivative contracts used to guard against fluctuations in borrowing costs, dropped. The rate, a fixed payment made to receive floating rates, fell to 6.66 percent from 6.80 percent at the end of last week.

To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net.

Last Updated: November 3, 2009 07:34 EST