Indian bonds and the rupee is expected to continue the bullish momentum heading into next week after big-bang reforms by the government raises hopes of a rate cut by the central bank at its next policy meeting. Dealers will await the Purchasing Managers Index data to be published on Oct. 1 for cues on the economy. The rupee is expected to gain further towards sub-52 levels with dealers predicting a range of 51.50 to 52.90 per dollar over the week. The 10-year bond yield is expected to move in a narrow 8.10 to 8.18 percent band. Dealers say they will await implementation of the announced reforms and also for the forthcoming reform agenda before building further large positions. However, any positive news from the government or the central bank would lead to a further rally of 5-10 basis points, they added. Global risk flows will also be watched over expectations that Spain will need to ask for a bailout that would allow the European Central Bank to buy its bonds. KEY EVENTS: Monday: India Sept manufacturing PMI Tuesday: National holiday Thursday: India services PMI Friday: Weekly bank lending, FX reserves. Financial markets would remain closed on Oct. 2 for a national holiday.

Source