More Stories

Informist, Friday, Jun. 19, 2026

 

By Janwee Prajapati

 

MUMBAI – Government bond prices ended lower Friday as traders refrained from carrying heavy positions on caution ahead of the weekend, dealers said. Traders were uncertain about the durability of the fragile ceasefire between the US and Iran, they said. Brent crude oil prices also climbed above the key $ 80-per-barrel level intraday, weighing on bond prices. Losses were limited as the cut-off yield at the INR-320-billion weekly gilt auction was largely in line with expectations, dealers said.      

 

"Market was broadly stable today," a dealer at a public sector bank said. "The auction was also in line with expectations. But the US-Iran peace deal is off, and they will not sign it (the peace agreement) today... Crude is also higher. This is why bond prices are down." 

 

The benchmark 6.94%, 2036 bond ended at INR 100.61, down from INR 100.71 Thursday. The yield on the bond settled at 6.8533%, up from 6.8387% Thursday. The yield on the 6.94%, 2036 bond moved between 6.8382% and 6.8575% during the day. The total turnover in the gilt market was INR 499.55 billion, down over 41% from INR 850.90 billion on Wednesday.

 

At 1700 IST, Brent crude futures for August delivery were at $79.69 per barrel, up from $77.65 per barrel at the end of Indian trading hours Thursday. Brent crude oil prices rose to an intraday high of $80.77, weighing on bond prices, dealers said. The rise in crude oil prices was largely due to uncertainty about the sustainability of the US-Iran peace deal. 

 

The White House said preparations were already in progress, noting that the logistics of the negotiations remain complex and unpredictable. Iran had previously signalled it was open to start technical talks after last week's 14-point agreement, but added it wanted to see evidence that Washington was following through on the interim deal first. Questions have also surfaced around the planned signing ceremony, with Tehran raising doubts about its necessity since both countries' presidents have already approved the pact.

 

Back home, the government sold INR 320 billion of gilts at the weekly gilt auction. The cut-off yield set on the bonds was largely in line with expectations, dealers said. At the auction, the Reserve Bank of India set a cut-off of INR 99.52 or 6.2300% yield on the 6.03%, 2029 gilt, INR 99.69 or 6.7373% yield at 6.68%, 2033 gilt, INR 97.10 or 7.4847% yield on the 7.24%, 2055 gilt and INR 100.52 or 7.4551% yield on the 7.50%, 2056 green bond.

 

The 6.03%, 2029 bond was largely bid by foreign banks for their asset-liability management books, dealers said. Some banks likely picked up the seven-year bond at the gilt auction, dealers said. Demand for the 7.24%, 2055 bond was firm as some traders said foreign investors bought the bond after the RBI added it to the Fully Accessible Route on Jun. 5. Mutual funds and banks also likely picked up the bond at the auction for their held-to-maturity books, dealers said. Meanwhile, the cut-off on the 7.50%, 2056 sovereign green bond had limited impact on the secondary market, with insurers likely having picked up the gilt, dealers said. Some long-term investors also picked up the 7.24%, 2055 bond, they said.

 

"The auction (result) was in line with expectations," a dealer at a primary dealership said. "Foreign participants bought around INR 6,000 (INR 60 billion) at the auction, mostly in the three-year segment." 

 

In the secondary market, the 6.68%, 2040 gilt was the second most-traded bond on Friday, with a trading volume of INR 29.15 billion at 1700 IST. Some traders placed short bets on the 15-year bond as they positioned for the weekly gilt auction Friday, dealers said. Some traders also booked profit on their holdings as the levels were seen as lucrative, they said. Some traders picked up the bond as they expected the bond's yield to fall, since foreign participants will likely buy it after its inclusion in the Fully Accessible Route. 

 

Traders remained optimistic about the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, which is likely to improve foreign inflows, dealers said. Some dealers expected the announcement to come next week or next month. If the inclusion does take place, dealers expect India's Fully Accessible Route bonds to account for 0.8-1.0% of the Bloomberg Global Aggregate Index. In its September consultation note, Bloomberg said a weightage of 0.7% was under consideration.  

 

Traders assessed the Monetary Policy Committee minutes released post-market hours. However, they do not expect the minutes to have a major impact on bond prices as they had expected the commentary to be slightly on the hawkish side, dealers said.  

 

Traders broadly expect the RBI's Monetary Policy Committee to keep the repo rate steady in the current calendar year. However, some traders expect the RBI's MPC to raise policy rates starting in October.

 

"I think there will be two rate hikes starting in October," a dealer at a state-owned bank said. "I am expecting a total of a 50 basis point hike. OIS (one-year overnight indexed swap rates) is also pricing in a similar number of rate hikes."  

 

Traders expect the yield on the 6.94%, 2036 bond to fall to 6.60% if India's Fully Accessible Route bonds are included in the Bloomberg Global Aggregate Index and foreign inflows continue, dealers said. Others, however, expect the yield on the 10-year benchmark bond to rise from 6.80%, as it is a psychologically crucial level at which traders are likely to take profits, they said.

 

OUTLOOK

Monday, government bond prices will track overnight movement in crude oil prices, dealers said. Even with a US-Iran peace deal, many traders think Brent crude is unlikely to remain around $80 per barrel due to continuing supply disruptions. The 10-year benchmark gilt yield is also seen as unlikely to fall below 6.80%. Some traders do not expect crude oil prices to fall to pre-war levels and instead expect prices to continue to hover near the $75-$85 per barrel mark, dealers said.

 

Market sentiment is expected to remain positive, given the likelihood that FPI flows will be sustained for at least two weeks, dealers said. The FPI inflows are expected to increase the liquidity in the banking system, which is likely to support bond prices, they said. If the US-Iran peace deal holds, traders are likely to pare bets of a rate hike by the RBI's Monetary Policy Committee in 2026.

 

Traders also await the release of the state borrowing calendar for the September quarter, and a higher-than-expected borrowing quantum will pull bond prices down, dealers said. Traders are divided on the size of state borrowing in Jul-Sept. Some expect the quantum to be broadly in line with the borrowing quantum in the June quarter, dealers said. Others expect it to be slightly higher than the borrowing in the September quarter a year ago.

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	97.2500	6.8837%	97.3300	6.8714%
6.94%, 2036	100.6050	6.8533%	100.7100	6.8387%
6.36%, 2031	99.4500	6.4962%	99.4950	6.4846%
6.68%, 2040	95.7600	7.1633%	95.9900	7.1361%
6.90%, 2065	91.3200	7.5968%	91.4200	7.5881%

 

---

India Gilts: Stay dn on profit booking; volumes improve after auction result

 

	1618 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.5875	100.7125	100.58	100.6575	100.71
YTM (%)	6.8558	6.8382	6.8568	6.8459	6.8387

 

MUMBAI--1618 IST--Prices of government bonds remained down as traders booked profit ahead of the weekend despite the INR-320-billion bond auction sailing through on expected lines, dealers said. The uncertainty on the West Asia situation continued to dampen risk appetite despite Brent crude futures for August delivery dipping below $80 a barrel intraday. Iran and the US cancelled scheduled talks on Friday, with reports saying Tehran sought to withdraw from the 60-day negotiation phase of the memorandum of understanding that the two sides signed on Thursday. 

 

The trading lull in the middle of the day was broken immediately after the auction results were announced. Trading volume in the government securities market rose only INR 25 billion between 1230 IST and 1330 IST, but nearly quadrupled in the next hour. However, the total turnover in the government securities market at 1618 IST was at INR 424.90 billion Friday, sharply down from INR 781.40 billion at 1630 IST Thursday, data from Clearing Corp. of India's Negotiated Dealing System – Order Matching platform showed.

 

Dealers said the auction result was in line with market expectations and, in fact, the cut-off on the 6.03%, 2029 and 6.68%, 2033 bonds was better than expected. The Reserve Bank of India set the cut-off at INR 99.52 on the three-year benchmark and INR 99.69 on the seven-year bond, both marginally higher than the median expectation in an Informist Poll. Some traders had expected lower cut-offs after their yields had slumped sharply over the past two weeks, dealers said. 

 

"After underwriting results, we thought there would not be demand for 2029 paper, but I think ALM (asset liability management) guys bought this paper," a dealer at a private-sector bank said. The RBI set the underwriting fee cut-off for the bond at 0.50 paisa, compared with the median of 0.20 paisa in an Informist Poll. 

 

Dealers said some foreign investors bought the 7.24%, 2055 bond at the auction after the RBI added it to the Fully Accessible Route on Jun. 5. However, its cut-off was set at INR 97.10, below the median expectation of INR 97.21 in the Informist Poll. The bond's price had risen before the result but erased all gains and fell after the cut-offs were announced. Some traders who had bought the bond the previous day may be booking profits after its price rose by 47 paise on Thursday, dealers said. 

 

Meanwhile, the cut-off on the 7.50%, 2056 sovereign green bond had limited impact on the secondary market, with insurers likely having picked up the gilt, dealers said. The 10-year benchmark 6.94%, 2036 bond is seen in the range of 6.83-6.87% for the rest of the day, dealers said. The minutes of the Monetary Policy Committee's June meeting are awaited, dealers said.  (J. Navya Sruthi)

---

India Gilts: Dn as Brent price hits $80/bbl; demand at auction seen mixed

 

	1239 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.6375	100.71	100.60	100.66	100.71
YTM (%)	6.8487	6.8382	6.8537	6.8459	6.8387

 

MUMBAI--1239 IST--Prices of government bonds fell more as near-month Brent crude oil futures rose above $80 per barrel, dealers said. Traders sold bonds maturing in 10 years or more on-screen to make space for bonds bought at the INR-320-billion auction, dealers said. The government sold the 6.03%, 2029 bond, the 6.68%, 2033 bond, the 7.24%, 2055 bond, and the 7.50%, 2056 green bond on Friday. 

 

Brent crude oil futures for delivery in August hit $80.77 intraday, up about 2% from the close of gilt market hours Thursday. Crude prices rose after talks set to take place between the US and Iran to implement a peace deal Friday were cancelled and Israel carried out airstrikes in Lebanon.   

Although the five-year bond was largely steady Thursday, it was nearly 9 paise down Friday as traders sold this bond to make space for the seven-year bond at the auction, dealers said. Demand at the auction is seen mixed. Dealers said demand for the 6.03%, 2029 bond was weak on expectations of a rate hike by the Reserve Bank of India's Monetary Policy Committee in 2026–27 (Apr-Mar). "The 6.03%, 2029 bond is not exactly three years and investors don't find it attractive as market expects RBI may hike rates this year," a dealer at a small finance bank said. "We are not expecting a hike in August, but there might be one in October," the dealer said.

 

Further, the recent rise in short-term bonds is unlikely to sustain as the RBI is likely to drain systemic liquidity as early as August ahead of a rate hike cycle, dealers said. Some traders expect robust demand for the bond as banks are likely to invest funds received from their foreign currency non-resident dollar-denominated bank deposits in bonds of similar maturity. Albeit, others said that the current yield of the bond was lower than these deposit rates, and therefore unattractive at current levels. Some traders also said that the bond's maturity would likely coincide with a rate cut cycle, making re-investment post-maturity expensive. Demand for the seven-year 2033 bond is seen robust from banks, dealers said. An Informist Poll of 14 market participants estimated the cut-off price on the bond at INR 99.68. The bond last traded at INR 99.74.

 

Some traders were also pessimistic about demand for the long-term 2056 green bond and 2055 gilt after an unexpectedly sharp rise in long-term bond prices Thursday, they said. The 'Others' segment of bond market participants – which consists of insurance companies, provident funds, and the Reserve Bank of India – was the largest net buyers of gilts Thursday, with net purchases worth INR 25.99 billion. Most of these purchases were by insurance companies, dealers speculated. However, due to the small notified size of these bonds, the auction may sail through, some dealers said. 

 

Volumes were lower compared to Thursday as investors were more attentive to the primary market. The total turnover in the government securities market was INR 198.80 billion at 1230 IST, down sharply from INR 516.75 billion at the same time Thursday, data from Clearing Corp. of India Ltd. showed. The benchmark 10-year 6.94%, 2036 bond is seen in the range of 6.82-6.87% during the day, dealers said.  (J. Navya Sruthi)

---

India Gilts: Tad down on overnight rise in crude oil; auction demand seen firm  

 

	0950 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.67	100.71	100.62	100.66	100.71
YTM (%)	6.8442	6.8382	6.8512	6.8459	6.8387

 

MUMBAI-–0950 IST--Prices of government bonds were slightly down, tracking an overnight rise in Brent crude oil price, dealers said. Some traders trimmed their bond holdings to make space in their portfolios for the fresh supply at the weekly gilts auction, which also weighed on bond prices, they said. The fall was limited as overall market sentiment remained positive, they said. Demand at the INR 320-billion auction is seen to be strong and the auction results will lend cues later in the day, dealers said.

 

The government will sell INR 110 billion of the 6.03%, 2029 bond, INR 110 billion of the 6.68%, 2033 bond, INR 50 billion of the 7.24%, 2055 gilt, and INR 50 billion of the 7.50%, 2056 green bond at the auction. Traders expect firm demand for all of them, dealers said. Mutual funds and banks are likely to pick up the 6.03%, 2029 bond and 6.68%, 2033 bond for their asset-liability-management books, while the 7.24%, 2055 bond and the 7.50%, 2056 green bond are likely to see robust demand from insurers and pension funds, they said. Traders will closely track the results of the auction, dealers said.

 

Brent Crude continuing to be below $80 per barrel kept market sentiment positive, dealers said. The August futures contract of Brent Crude was at $79.14 per barrel at 0930 IST, up slightly from $78.67 per barrel at the end of Indian gilt market hours Thursday, but still below the key $80 mark. "There is a slight rise in crude (oil prices), but it is still lower than 80 ($880 per barrel), so the sentiment is positive," a dealer at a primary dealership said. "Before the auction (weekly gilts auction), there is some pressure (on bond prices) because of sell-off."

 

The total turnover in the government securities market was INR 85.70 billion at 0950 IST, up sharply from INR 49.10 billion at 0930 IST Thursday, data from Clearing Corp. of India Ltd. showed. The benchmark 10-year 6.94%, 2036 bond is seen in the range of 6.83-6.90% during the day, dealers said. (Diksha Tripathy)

---

India Gilts: Seen down on overnight rise in crude; auction result to lend cues

 

MUMBAI – Prices of government bonds are expected to open lower Friday, tracking an overnight rise in Brent crude oil prices, dealers said. Some traders are likely to trim positions ahead of the weekly gilt auction to make room in their portfolios for fresh supply, which could weigh on bond prices. However, most market participants are expected to remain cautious ahead of the auction result, they said.

 

The yield on the 10-year benchmark, 6.94%, 2036 gilt, is expected to open near 6.85% and move in a range of 6.83-6.90% during the day, dealers said. The benchmark 6.94%, 2036 bond ended at INR 100.71 on Thursday, up from INR 100.54 Wednesday. Its yield settled at 6.8387%, down from 6.8626% Wednesday. The yield on the 6.94%, 2036 bond moved between 6.8261% and 6.8731% during the day. 

 

Market participants will closely track the movement in crude oil prices through the day, dealers said. Oil prices turned volatile again after recent comments by US Vice President J.D. Vance raised concerns about the durability of the West Asia peace agreement. Vance cautioned Israel against launching further attacks on Iran-backed Hezbollah in Lebanon, fuelling doubts about the stability of the accord. Brent crude futures for August delivery were at $79.54 per barrel at 0800 IST, up more than 1% from levels prevailing at the close of Indian gilt market hours on Thursday.

Bond prices may, however, draw support from foreign portfolio investor inflows, which are expected to improve banking system liquidity and underpin market sentiment, dealers said. If the US-Iran peace deal holds, traders are likely to scale back expectations of a rate hike by the Reserve Bank of India's Monetary Policy Committee in 2026.

Traders also await a decision on the inclusion of India's Fully Accessible Route bonds in the Bloomberg Global Aggregate Index, dealers said. Some market participants expect the yield on the benchmark 6.94%, 2036 bond to decline to 6.60% if the bonds are included in the index and foreign inflows continue, they said. Others believe the yield could reverse from around 6.80%, a psychologically significant level where traders may choose to book profits, dealers said.

Ahead of the auction result, traders are likely to refrain from aggressive positioning, keeping volumes subdued in the first half of the session, dealers said. Trading activity may pick up in the second half after the auction outcome is announced, which is expected to provide fresh direction to the market, dealers said.

 

The government will sell INR 110 billion of the 6.03%, 2029 bond, INR 110 billion of the 6.68%, 2033 bond, INR 50 billion of the 7.24%, 2055 gilt, and INR 50 billion of the 7.50%, 2056 green bond at the auction. Traders widely expect firm demand for all bonds on offer. The 6.03%, 2029 bond and the 6.68%, 2033 bond are likely to be picked up by mutual funds and banks for their asset-liability-management books, dealers said. The 7.24%, 2055 bond and the 7.50%, 2056 green bond are likely to see robust demand from investors, they said.  (Diksha Tripathy) 

 

End

 

US$1 = INR 94.32

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

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.