Indian Bonds Gain With Yield at Two-Month Low Before Exit Polls

India’s 10-year government bonds rose, with the yield dropping to a two-month low, before the release of exit-poll data that will provide clues to the outcome of national elections.

Voting in the world’s largest democracy, which began April 7, will draw to an end today. Exit poll results will be allowed to be telecast after 6:30 p.m. local time, according to the Election Commission. Opinion polls have earlier indicated that the main opposition Bharatiya Janata Party will secure the most seats, ending the Congress Party’s decade-long rule. The results will be announced on May 16.

“A clear mandate will be welcomed by the markets,” Radhika Rao, a Singapore-based economist at DBS Bank Ltd., wrote in a research note today. “The strength in the mandate of the next government will have an important bearing on the pace of recovery.”

The yield on the 8.83 percent sovereign bonds due November 2023 dropped two basis points, or 0.02 percentage point, to 8.73 percent in Mumbai, prices from the RBI’s trading system show. The rate, which slid six basis points last week, is at its lowest since March 12.

Investors are also awaiting data on inflation and factory output due later today. Consumer prices probably rose 8.5 percent in April from a year earlier, after increasing 8.31 percent the previous month, according to a Bloomberg survey. Industrial output likely contracted 1.5 percent in March, another survey shows.

One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, were unchanged from May 9 at 8.53 percent, data compiled by Bloomberg show. They fell seven basis points last week and are at their lowest level since Jan. 27.

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