RTRS: India bond yields down as tightening concerns ease
* Bond redemptions in early January worth $5.9 billion
* Panel panel deputy's policy comments also lifted sentiment (Updates to mid morning)
MUMBAI, Dec 23 (Reuters) - Indian federal bond yields eased on Wednesday as concerns of an early hike in policy rates by the central bank receded and expectations of better cash conditions from bond redemptions in early next month lifted sentiment.
At 11:00 a.m. (0530 GMT), the yield on the 10-year benchmark bond IN069019G=CC was at 7.68 percent, two basis points below its close on Tuesday. On Monday, it touched an intraday peak of 7.75 percent, its highest since Nov. 11, 2008.
Dealers expect the 10-year bond to trade in a range of 7.65 to 7.72 percent during the day.
The most-traded 6.35 percent 2020 bond IN063520G=CC was at 7.54 percent, down from 7.57 percent at Tuesday's close.
Total volume at the central bank's reporting platform was a moderate 30.35 billion rupees ($650 million).
"The market had slightly overreacted to the mounted rate hike worries recently. It is now taking relief from comments by policymakers," said a trader at a state-run bank.
On Tuesday, Montek Singh Ahluwalia, the deputy chairman of India's Planning Commission, said the sharp surge in food prices reflected the impact of the drought and inefficient distribution, which could not be addressed by monetary policy. [ID:nSGE5BL06U]
The absence of a federal debt auction until early January and bond redemptions of around 275 billion rupees due next month supported sentiment, traders said.
The government is scheduled to sell a total of 350 billion rupees of bonds up to Feb. 5 to meet its borrowing requirement for 2009/10.
"The supplies are matching inflows, which is a strong positive," the trader said.
The benchmark five-year swap was trading at 6.85/89 percent, from its previous close of 6.86/90 percent.
In interest-rate futures on the National Stock Exchange (NSE), the March contract N10H0 was implying a yield of 8.2310 percent, from its previous close of 8.2357 percent. (Reporting by Boby Michael; Editing by John Mair)
