The 10-year benchmark Indian federal bond yield reported significant decline this week due to reduced supply. It was just at 7.38 per cent at 9:15 a. m. as compared to 7.47 percent on Friday.

The bond yield reached at its highest level of 7.50 percent on Friday. However, the benchmark five-year interest rate swap was at 6.34/39 percent as compared to 6.40/45 recorded previously.

The central bank announced the auction of 110 billion rupees ($2.25 billion) of bonds on Friday which is less that the 120 billion rupees of bonds the apex bank has been selling since April. India has sold 2.82 trillion rupees of bonds and expected to sell more in coming times as per its 4.51 trillion bond sale program.

Dealers said that shorter maturities generally attract higher demand, so the central bank announced the auction.

Roy Paul, Deputy General Manager of treasury at Federal Bank, added, "Yields are lower on the day as the auction size has reduced and investors are finding it attractive to buy at higher yields."