MUMBAI, Nov 21 (Reuters) - Indian government bond yields are likely to be little changed early on Tuesday amid a lack of fresh triggers, with focus turning to a state debt sale for further cues on demand from investors.
The 10-year benchmark bond yield is expected to be between 7.23%-7.27% after ending the previous session at 7.2575%, a trader with a primary dealership said.
Eleven states aim to raise 116.20 billion rupees ($1.40 billion) through sale of bonds later in the day.
"The near-term triggers for the Indian bond market is likely to be the timing of the OMO sale, if any, by the Reserve Bank of India (RBI)," said Vikrant Mehta, head of fixed income at ITI Mutual Fund.
Banking system liquidity could turn surplus in the first fortnight of December and a significant surplus could prompt an open market bond sale announcement by the central bank, he added.
"The benchmark bond yields rose on Monday on profit booking but should now remain in 7.24%-7.26% zone as there are no major surprises from U.S. Treasury or oil price movement," the trader added.
The U.S. Treasury yields were lower on Monday after solid bidding in 20-year Treasury bonds sale suggested the market still anticipates that the Federal Reserve will cut interest rates around June next year.
Meanwhile, oil prices rose on Monday as further supply cuts in OPEC+ production are expected to be announced following a meeting of member countries early next week.
Traders are also keeping a close eye on whether Indian bonds get included in Bloomberg Global Aggregate and the Emerging Market Local Currency indexes after JPMorgan included bonds in its emerging market index in September. KEY INDICATORS: ** Brent crude futures 0.2% lower at $82.18 per barrel, after rising 2.1% in previous session ** 10-year U.S. Treasury yield at 4.4082%, two-year yield at 4.9108% ** Eleven states to raise 116.20 billion rupees via sale of bonds ($1 = 83.2440 Indian rupees) (Reporting by Bhakti Tambe)
