Indian Benchmark Bonds Gain a Fifth Day on Rate-Cut Speculation

India’s government bonds advanced for a fifth day, the longest winning streak since January, on speculation slowing growth and easing inflation will create room for the central bank to cut interest rates. The rupee was little changed.

India’s industrial output probably shrank 1 percent in February, according to a Bloomberg survey before data due April 12. The Reserve Bank of India reduced its repurchase rate by 25 basis points each in January and March, and the next review is scheduled for May 3.

“Bonds have rallied as growth continues to be a concern,” said Vaidyanathan Iyer, Mumbai-based executive director at AK Capital Services Ltd. “There is some monetary easing on cards.”

The yield on the 8.15 percent bonds due June 2022 fell three basis points, or 0.03 percentage point, to 7.88 percent in Mumbai, according to the central bank’s trading system.

A separate survey showed consumer price index rose 10.75 percent in March, compared with 10.91 percent the previous month. The data is due on April 12.

The one-year swap, a derivative contract used to guard against fluctuations in funding costs, fell one basis point to 7.4150 in Mumbai, data compiled by Bloomberg show. The rate was the lowest since since April 4, 2011.

The local currency was little changed today, after strengthening for two days.

The rupee was at 54.5850 per dollar in Mumbai, compared with 54.5750 yesterday, data compiled by Bloomberg show. One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, was little changed at 7.83 percent.

Three-month onshore rupee forwards traded at 55.68 per dollar, compared with 55.64 yesterday, according to data compiled by Bloomberg. Offshore non-deliverable contracts were at 55.58 versus 55.54. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.