* Government to sell 265 bln rupees of debt this week
* Bond auction results to provide near-term cues- traders (Updates to close)
By Neha D'silva
MUMBAI, May 25 (Reuters) - Indian federal bond yields rose to five-week highs on Monday on worries the government will increase planned market borrowings in its final budget, although investors saw some value at the peak for yields.
The 10-year benchmark bond yield ended at 6.56 percent, off a high of 6.58 percent which was its highest since mid-April but still up 8 basis points from Friday's close. Yields have risen 21 basis points over the past three sessions.
"The market will wait and watch for further direction and the next bond auction will be watched closely for where the yield demand is coming in," said K. Ramkumar, head of fixed income at Sundaram BNP Paribas Mutual Fund.
Volumes were an average 64.75 billion rupees ($1.4 billion) on the central bank's trading platform, with the 2019 bond being most actively traded.
This week, the government is due to sell 45 billion rupees of state development loans on Tuesday, 70 billion rupees of treasury bills on Wednesday, and 150 billion rupees of bonds on Thursday.
A local television channel quoted finance ministry sources saying the government is working on a stimulus package of 0.5-1 percent of gross domestic product, which dealers say could exert further pressure on the government's market borrowing programme.
In its interim budget, the government said it would borrow a record gross 3.62 trillion rupees in 2009/10 and the new government is expected to announce a revised borrowing plan in its final budget, due by late June or early July. ($1 = 47.30 Indian Rupees)
* Bond auction results to provide near-term cues- traders (Updates to close)
By Neha D'silva
MUMBAI, May 25 (Reuters) - Indian federal bond yields rose to five-week highs on Monday on worries the government will increase planned market borrowings in its final budget, although investors saw some value at the peak for yields.
The 10-year benchmark bond yield
"The market will wait and watch for further direction and the next bond auction will be watched closely for where the yield demand is coming in," said K. Ramkumar, head of fixed income at Sundaram BNP Paribas Mutual Fund.
Volumes were an average 64.75 billion rupees ($1.4 billion) on the central bank's trading platform, with the 2019 bond being most actively traded.
This week, the government is due to sell 45 billion rupees of state development loans on Tuesday, 70 billion rupees of treasury bills on Wednesday, and 150 billion rupees of bonds on Thursday.
A local television channel quoted finance ministry sources saying the government is working on a stimulus package of 0.5-1 percent of gross domestic product, which dealers say could exert further pressure on the government's market borrowing programme.
In its interim budget, the government said it would borrow a record gross 3.62 trillion rupees in 2009/10 and the new government is expected to announce a revised borrowing plan in its final budget, due by late June or early July. ($1 = 47.30 Indian Rupees)
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