India’s 10-year bonds fell for a second day on speculation yields near the lowest since 2004 will deter investors. Banks and securities companies may have cut debt purchases after yields dropped 1.82 percentage points in December, the biggest monthly decline in at least a decade. Indian bonds completed their biggest annual gain since 2001 as slowing inflation fueled speculation the central bank will further cut interest rates. The yield on the 8.24 percent note due April 2018 rose six basis points to 5.36 percent as of 10:12 a.m. in Mumbai, according to the central bank’s trading system. It fell as low as 5.20 percent yesterday, the lowest since May 2004. The price fell 0.52, or 52 paise per 100-rupee face amount, to 120.91. Ten-year yields have dropped 4.2 percentage points from a seven-year high of 9.55 percent reached in July. They fell 2.54 percentage points in 2008, the first yearly decline since 2003.

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