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Informist, Wednesday, Oct. 15, 2025

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds ended sharply higher Wednesday tracking the rise in the rupee against the dollar as foreign portfolio investors and mutual funds purchased gilts, dealers said. As at 1700 IST, foreign portfolio investors had net purchased gilts worth INR 21.13 billion through the fully accessible route, according to Clearing Corp. of India data.

 

The 10-year benchmark 6.33%, 2035 gilt closed at INR 98.94, or a yield of 6.48%, as against INR 98.76, or 6.51% yield, Tuesday. The 6.48%, 2035 bond ended at INR 100.43, or a yield of 6.42%, against INR 100.26 or 6.44% Tuesday. The 6.68%, 2040 bond ended at INR 99.17, up 20 paise from Tuesday's close. At 1700 IST, the yield on the 10-year benchmark US Treasury note was 4.01%, compared with 4.02% at the same time Tuesday.

 

"There have been quite positive comments from RBI regarding how it would manage the currency so that has given some confidence and plus OIS is performing really well," a trader at a primary dealership said. "...and so some new buyers are entering the market."

 

In the foreign exchange market, the rupee posted its biggest one-day gain in over 16 weeks against the dollar as the Reserve Bank of India ramped up its support for the Indian currency by selling dollars. The rupee also got a boost from a Bloomberg report that the central bank is prepared to continue with its intervention until the rupee settles at a stronger level. The rupee ended 0.8% higher against the dollar at 88.0750 a dollar, its highest level since Sept. 17. It had touched a high of 87.9100 a dollar early in the day.

 

Gilts tracked the rise in the rupee, driven by foreign inflows. A dealer said the RBI's dollar sales could drain rupee liquidity, which could prompt the central bank to conduct gilt purchases through open market operations.

 

Foreign inflows were also driven by renewed bets of rate cuts in the US after US Federal Reserve Chair Jerome Powell left the door open to further rate cuts, citing weakness in the US labour market. The five-year overnight indexed swap rate closed at its lowest since May 7 on offshore receiving as bets of a rate cut ramped up both in the US, ahead of the US Federal Open Market Committee meeting at the end of this month, and in India at RBI's Monetary Policy Committee meeting in December. The fall in swaps also aided the rise in bond prices, dealers said.

 

Bonds maturing within seven to 15 years were the best performers across the yield curve, since they were underperforming in recent sessions, dealers said. Traders expect yield spreads of these maturities, along with bonds maturing in 30-50 years over the benchmark 10-year bond to compress by a few more basis points, though some expect spreads to remain at current levels.

  

Most traders are optimistic of a fall in bond yields in the near term, due to low inflation, support from the RBI to keep the rupee movement stable, and bets of at least one more rate cut in December. Reduced supply of long-term gilts and lesser-than-indicated supply of state bonds so far has also helped the rise in bond prices. However, traders expect the pace of fall in bond yields to be slow, especially due to fresh supply at weekly auctions and geopolitical uncertainty. Gains in long-term and short-term bonds were tempered Wednesday ahead of the weekly gilt auction Friday. The government will sell INR 180 billion of the 6.01%, 2030 bond and INR 120 billion of the 7.09%, 2074 bond.

 

"Everything is looking positive right now because RBI support to currency, inflation is low, and at least one more cut we are seeing," a trader at another primary dealership said. "But it'll be a very spaced-out gradual fall (in yields)."

 

Turnover in the gilts market was INR 900.05 billion, sharply higher than INR 608.40 billion Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. There were no trades using the RBI's wholesale e-rupee pilot, compared to six trades worth INR 1.50 billion in the 2033 floating rate bond and two trades worth INR 100 million in the 6.33%, 2035 bond using the e-rupee Tuesday.

 

OUTLOOK

On Thursday, government bonds may take cues from the minutes of the Monetary Policy Committee's Sept. 29-Oct. 1 meeting released post market hours. Traders were waiting for the minutes with hopes of comments from the RBI's internal members on slowing economic growth. Traders were also waiting for the comments of external members Nagesh Kumar and Ram Singh as they were of the view that policy stance should be accommodative.

 

The minutes showed that the panel diverged on the timing and intent behind cutting the policy repo rate any further. All the six members acknowledged that the sharp fall in inflation had opened up space for further monetary policy easing. RBI Governor Sanjay Malhotra showed concern about slowing growth. "To summarise, even though growth is strong by current reckoning, its outlook is softer and is expected to be below our aspirations. The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth," Malhotra said. "...The intent of policy, nevertheless, is to continue to facilitate growth-enabling conditions."

 

The overnight movement of US Treasury yields and the movement of the rupee against the dollar will also lend cues to gilts. Traders will realign portfolios ahead of the weekly gilt auction Friday.

 

Geopolitical developments and crude oil price movements will influence movement of gilts Thursday. The 6.48%, 2035 bond yield is seen falling to 6.40?fore the next policy review in December, dealers said. On the technical front, the 6.33%, 2035 gilt yield is seen falling to 6.44% next, if it falls below the key 6.47% level. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.42-6.52%.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.33%, 2035	98.9400	6.4799%	98.7550	6.5063%
6.48%, 2035	100.4300	6.4206%	100.2625	6.4436%
6.01%, 2030	99.5875	6.1083%	99.5000	6.1298%
6.68%, 2040	99.1700	6.7684%	98.9700	6.7902%
6.90%, 2065	97.0200	7.1266%	96.8300	7.1415%

 

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India Gilts: Up on expectation of rate cut by MPC in Dec; Oct minutes awaited

 

	1626 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.90	98.95	98.75	98.75	98.76
YTM (%)	6.4856	6.4792	6.5071	6.5071	6.5063

 

	1626 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.40	100.45	100.30	100.30	100.26
YTM (%)	6.4247	6.4175	6.4384	6.4384	6.4436

 

India Gilts: Up on expectation of rate cut by MPC in Dec; Oct minutes awaited

 

MUMBAI--1626 IST--Government bond prices rose on account of positivity around the expectations of a rate cut by the Reserve Bank of India's Monetary Policy Committee in the next meeting scheduled in December, dealers said. Traders await the minutes of the MPC's Sept. 29-Oct. 1 meeting to be released at 1700 IST Wednesday.

 

Rate cut expectations have risen after CPI inflation fell to an over-eight-year low of 1.54% in September from 2.07% in August. At 0.13%, the WPI inflation for September was also lower than the estimate of 0.4% in an Informist poll. The yield on the 10-year benchmark 6.33%, 2035 gilt fell to its lowest level since Sept. 24. However, traders will assess the comments on growth by RBI Governor Sanjay Malhotra and other policymakers in the minutes of the monetary policy before ramping up their bets, dealers said.

 

"The 6.33%, 2035 benchmark bond yield could fall to 6.42% if there is a rate cut in the monetary policy meeting in December," a dealer at a state-owned bank said. "Even if there is a cut, the RBI governor's tone after the rate cut will be important."

 

Traders said that a 25-basis-point repo rate cut from the current 5.50% was not fully priced into bonds yet, even as it had reflected in overnight indexed swap rates weeks ago. They are likely to begin picking up gilts closer to the policy, though gains in bonds had also been limited due to profit booking from state-owned banks and mutual funds, dealers said.

 

Gilt prices were also up as foreign portfolio investment rose, with the 10-year US Treasury yield hovering around a four-month low of 4.0%, dealers said. FPIs have bought nearly INR 16 billion worth of fully accessible route gilts so far Wednesday, according to Clearing Corp. of India data. On Tuesday, US Federal Reserve Chair Jerome Powell's comments about weakness in the labour market indicated that monetary policy easing in the US is likely to continue.

 

Turnover in the gilt market was INR 812.35 billion, higher than INR 549.30 billion at 1620 IST Tuesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and that on the 6.48%, 2035 bond at 6.42-6.48%.  (Janwee Prajapati)

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India Gilts: Remain up on likely FPI buys; 7-15 year gilts outperform

 

	1249 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.86	98.88	98.75	98.75	98.76
YTM (%)	6.4910	6.4885	6.5071	6.5071	6.5063

 

	1249 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.36	100.38	100.29	100.30	100.26
YTM (%)	6.4309	6.4274	6.4405	6.4384	6.4436

 

MUMBAI--1249 IST--Most government bond prices remained up on likely buys by foreign portfolio investors as market sentiment turned positive after the rupee surged against the dollar, dealers said. Increased rate cut expectations by the US Federal Open Market Committee later this month after a dovish speech by US Federal Reserve Chair Jerome Powell on Tuesday also aided buys. A fall in overnight indexed swap rates further led to a rise in gilts, they added.

 

Foreign portfolio investors likely picked up gilts maturing in 10-15 years, dealers said. This led the 10-year benchmark 6.33%, 2035 gilt yield to fall to 6.4885%, the lowest since Sept. 25, which led domestic traders to buy the 10-year gilt with the view that the yield on the bond could fall below 6.47%, dealers said. Meanwhile, the five-year OIS rate fell to 5.58%, the lowest since Jun. 6., which also aided the rise in gilts.

 

"Market is expecting a rate cut here but so far because of the pressure in rupee and uncertainty on the global front, we have seen a very range-bound trading over the past week or so," a dealer at a state-owned bank said. "The rise in rupee helped bring in some flows and OIS (five-year) has also broken the 6.60% level. It's mostly traders (buying) though, and if it (10-year benchmark gilt yield) breaks 6.47%, next we could see it go to 6.44%."

 

Traders continued to pick up gilts maturing in seven to 15 years as they found yields on these bonds attractive, while they sold longer tenure gilts, dealers said. The rise in longer tenure gilts was mostly over, dealers said, with the 30-year 7.24%, 2055 bond currently trading at 7.08% yield, down from 7.15?ter the Reserve Bank of India Monetary Policy Committee's decision on Oct. 1. A further flattening in yield spreads on longer tenure gilts over the 10-year benchmark gilt could only come once rate cut expectations are ramped up, dealers said. Longer tenure gilts also erased some gains as traders sold bonds at a profit after they rose in early trade, dealers said.

 

However, traders refrained from placing aggressive bets, which capped the gains, before the minutes of the Reserve Bank of India Monetary Policy Committee's October meeting is released post market hours Thursday, they said. Many traders feel the rate-setting panel will not opt for rate cuts in December if India and the US reach a trade deal before the meeting, thereby offsetting the slowdown in growth. 

 

The turnover in the gilts market was INR 341.70 billion, higher than INR 198.20 billion at 1230 IST Tuesday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.47-6.53% and that on the 6.48%, 2035 bond at 6.40-6.48%.  (Srijita Bose)

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India Gilts: Up on rise in rupee against dollar, Fed Powell's comments

 

	0948 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.85	98.86	98.75	98.75	98.76
YTM (%)	6.4928	6.4913	6.5071	6.5071	6.5063

 

	0948 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.36	100.37	100.30	100.30	100.26
YTM (%)	6.4302	6.4295	6.4384	6.4384	6.4436

 

MUMBAI--0948 IST--Governemnt bond prices rose, tracking the rupee's appreciation against the dollar to highs not seen in nearly a month, dealers said. US Treasury yields eased slightly after a keynote speech by US Federal Reserve Chair Jerome Powell boosted rate cut bets in the US, which in turn was seen lending cues for the Reserve Bank of India's Monetary Policy Committee to follow suit. supported aided gilt prices Wednesday, dealers said.

 

The rupee rose to a high of 87.91 early in the day, likely due to intervention by the central bank and a fall in the dollar index. On Tuesday, Powell left the door open to further rate cuts, citing weakness in the US labour market. Some dealers expect the rise in the rupee and heightened rate cut hopes to attract foreign portfolio investors to pick up gilts. However, the rise in gilts is likely to remain capped as traders avoid aggressive bets before the minutes of the Monetary Policy Committee's Sept. 29-Oct. 1 meeting. due to be released at 1700 IST.

 

"The 6.33%, 2035 benchmark bond yield fell below 6.50% which was a psychologically crucial level and is likely to fall till 6.48% later in the day after which, there could be retracement as traders will likely book profit at these levels," a dealer at a primary dealership said.

 

Traders may ramp up bets of one or more rate cuts in December and beyond after the Monetary Policy Committee, in its October policy decision, signalled that low inflation had opened space for policy easing, dealers said. These bets got a fillip after CPI inflation fell to an over-eight-year low of 1.54% in September from 2.07% in August. The WPI inflation print came in at 0.13%, lower than the estimate of 0.4% in an Informist poll. While the overall outlook turned positive due to these events, traders will wait for the detailed comments of the members of the MPC before taking aggressive bets. 

 

The turnover in the gilt market was INR 118.45 billion, higher than INR 38.10 billion at 0930 IST Tuesday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and that on the 6.48%, 2035 bond at 6.42-6.48%.  (Janwee Prajapati)

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India Gilts: Seen steady, focus on minutes of Oct MPC meeting Wed

 

MUMBAI – Government bond prices are seen steady as traders await fresh domestic cues, dealers said. Traders will wait for minutes of the October meeting of the Reserve Bank of India's Monetary Policy Committee, due after market hours, they said. 

 

The yield on the 6.33%, 2035 gilt is seen moving in a range of 6.48-6.55% during the day. On Tuesday, the 2035 gilt ended at INR 98.76 or 6.51% yield. Meanwhile, the newly issued 10-year 6.48%, 2035 bond is expected to move in a range if 6.42-6.47%. On Tuesday, it ended at INR 100.26 or 6.44% yield. 

 

Traders will closely track technical levels of gilt yields, as yields are not seen falling sharply in the near term despite hope of further rates cuts by the Monetary Policy Committee. Traders still expect the committee to cut the repo rate by another 25 basis points as early as December. Traders will also look for further clarity on any US-India trade deal or GDP growth numbers to further ramp up bets of a rate cut. Dealers said traders were waiting for minutes of the MPC's October meeting to guage the comments by members of the panel. 

 

Traders may also look to realign portfolios ahead of the weekly gilt auction Friday. The government will sell INR 180 billion of the 6.01%, 2030 bond and INR 120 billion of the 7.09%, 2074 bond on Friday. Some traders may place short bets on the five-year gilt, dealers said. However, as both these bonds are expected to be bid by investors at the auction, short bets may not be significant, they said.  

 

Meanwhile, the 10-year US Treasury yield eased slightly to 4.01% at 0837 IST from 4.02% at 1700 IST Tuesday. The fall, though insignificant, could attract some foreign portfolio investors after renewed bets of rate cuts in the US following comments by Federal Reserve Chair Jerome Powell on Tuesday, dealers said. Powell left the door open to further rate cuts, citing weakness in the US labour market. Traders will also watch out for the movement in the rupee against the dollar, they said.  (Srijita Bose)

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

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