Indian bond yields edged lower on Tuesday after the government cancelled a second straight weekly debt auction on the back of comfortable cash balances, while in-line retail inflation data also aided sentiment.
The benchmark 10-year bond yield was trading at 6.62 per cent, down 5 basis points on the day. It has now erased all losses made since the budget on February 1 when the session low for the 10-year was at 6.65 per cent.
Yields had surged sharply after the budget, with the 10-year rising to as high as 6.95 per cent in subsequent days, on account of the record market borrowing announced for the next fiscal year and a higher-than-expected fiscal deficit target.
India's retail inflation is now over the upper limit of the Reserve Bank of India's tolerance band, accelerating to a seven-month high just above 6 per cent in January, though economists don't expect this to lead to a rate hike in the near future.
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