MUMBAI: Indian's bond markets rallied on Friday, after media reports pointed to progress in the inclusion of local bonds in global indexes.

The benchmark 10-year government bond yield was at 7.2181% as of 0500 GMT. The yield has risen 11 basis points in the last six sessions, after ending at 7.2929% on Thursday. The new 10-year 7.26% 2032 bond yield was at 7.1992%. It had ended at 7.2773% on Thursday.

"Since Goldman Sachs report, index inclusion has been on the the minds of people which is also a reason for yields not rising much recently," said a trader with a private bank.

Goldman Sachs had in mid-August said that it expects India to be included in global bond indexes in 2023, leading to passive inflows of around $30 billion.

Earlier in the day, the Financial Times reported that JPMorgan is speaking to large investors over adding India to its emerging-market bond index.

The bank is seeking investor views on whether to make a large chunk of Indian government bond market eligible to be included in the GBI-EM Global Diversified index of local currency debt, according to the report.

"With another report, it seems there is actually some progress on ground, and we could see a favourable outcome in coming months," the trader said.

Similar talks of inclusion in January, had lured around 60 billion rupees of overseas portfolio flows into bonds that month.

So far in August, investors have bought bonds worth over 39 billion rupees on a net basis.

Meanwhile, the 10-year U.S. Treasury yield eased on Thursday ahead of Federal Reserve Chair Jerome Powell's comments later in the day.

India's federal government plans to raise 320 billion rupees ($4.01 billion) through a bond auction on Friday, and the sale includes liquid five-year and 14-year notes. ($1 = 79.8450 Indian rupees) (Reporting by Dharamraj Lalit Dhutia Editing by)