India bonds tread water ahead of large debt sale

Indian government bonds traded rangebound ahead of a large debt auction, with foreign investors buying about 16.5 billion rupees under the fully accessible route on expectations of a possible Bloomberg Index inclusion. Foreign banks turned net buyers of more than 50 billion rupees on Thursday, snapping a three-session selling streak. Meanwhile, short-term rates rose as banking system liquidity tightened, with the liquidity surplus falling to 832 billion rupees from 1.3 trillion rupees, pushing the 1-year overnight index swap rate up 2 bps to 5.9150%.