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Informist, Tuesday, Jun. 23, 2026

 

By Janwee Prajapati

 

MUMBAI – Government bond prices ended higher Tuesday on likely purchases by foreign portfolio investors and Brent crude oil remaining below $80 per barrel, dealers said. Bond prices rose to the day's high following the result of the state bond auction where cut-off yields were lower than expected, dealers said. The rise in bond prices was limited as traders took profits on their holdings at levels seen to be attractive, dealers said.

 

The total turnover in the gilt market rose to INR 675.90 billion, up over 52% from INR 443.35 billion Monday. The trade volume surged because of positive sentiment in the market, with the US issuing a 60-day licence allowing Iran to sell oil on the international market while both countries continue negotiations aimed at reaching a permanent peace settlement. Following the development, Brent crude oil fell intraday, which also helped bond prices, dealers said. At 1700 IST, the Brent Crude futures contract for August delivery was at $77.79 per barrel, up from the day's low of $76.43 per barrel but down from $79.29 per barrel at the end of Indian trading hours Monday.

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 100.73, up from INR 100.65 Monday. The yield on the bond settled at 6.8364%, against 6.8473% at the end of the previous trading session. The yield on the 6.94%, 2036 bond has not fallen below the key technical level of 6.83% for three consecutive trading sessions as traders likely took profits on their holdings at this level, dealers said. Traders expect the yield on the 10-year benchmark bond to fall below 6.83% only if there is a significant positive development in the US-Iran peace agreement, dealers said.

 

"Some people are definitely booking profits at 6.83%... the market (bond prices) tested 6.82?ew days back, but it did not sustain," a dealer at a private-sector bank said. "Traders are expecting the bond yield to fall going ahead due to foreign inflows... so they are selling their positions which they had built at higher yields and entering fresh positions." 

 

However, some traders expect the yield on the 6.94%, 2036 bond to drop to 6.60% if India's Fully Accessible Route bonds are added to Bloomberg's flagship Global Aggregate Index and foreign inflows persist. Others, however, see the 10-year benchmark yield rebounding from 6.80%, calling it a key psychological level where traders are likely to take profits.

 

At the state bond auction Tuesday, banks likely bought bonds maturing in up to 10 years for their asset-liability-management book and picked up 10-year and 15-year bonds for their held-to-maturity books, dealers said. Insurers and pension funds were keen to pick up long-term state bonds at the auction, dealers said. Foreign portfolio investors are also likely to have bought state bonds at the auction, they said. The Reserve Bank of India set the cut-off yield on 10-year state bonds in the range of 7.53-7.62%. Gujarat exercised the greenshoe option of INR 5 billion on its nine-year and 13-year bonds to raise INR 10 billion beyond the notified amount, resulting in a total auction size of INR 179 billion, the results showed.

 

On the yield curve, while some traders preferred the long-term bonds, others seemed to favour short-term paper, dealers said. Foreign investors likely picked up long-term bonds Tuesday as they expect to make profits on these holdings after the inclusion of India's gilts in the Bloomberg Global Aggregate Index, dealers said. The RBI added on-the-run 15-, 30-, and 40-year benchmark gilts to the Fully Accessible Route on Jun. 5 as part of its measures to attract foreign capital.

 

"We are going for 10 years and above, because the long-term is where the juice is," a dealer at another private-sector bank said. "There is not much rally left in short-term bonds." Some traders, however, bought short-term bonds as they expect the foreign inflows paired with comfortable liquidity in the banking system to push up short-term bond prices, dealers said.

 

The 2034 floating-rate bond had a trading volume of INR 4.30 billion Tuesday, following strong activity on Monday when the 2033 and 2034 floating-rate bonds led trading on the Negotiated Dealing System–Order Matching platform's reported deals segment. These bonds tend to be favoured in a rate-hike cycle since their yields adjust with rising policy rates, offering attractive returns. With fewer hikes by the RBI's Monetary Policy Committee priced in for the financial year 2026-27 (Apr-Mar), dealers said banks have been offloading floating rate bonds from their held-to-maturity portfolios.

 

OUTLOOK

Wednesday, government bond prices will track the overnight movement in crude oil prices and any significant development in the peace negotiations between the US and Iran, dealers said. Given that the overall global scenario remains unchanged, traders expect the yield on the 10-year benchmark 6.94%, 2036 gilt to remain in the range of 6.83-6.88%, dealers said. 

 

Traders will also track the INR 240-billion auction of Treasury bills Wednesday as a higher-than-expected cut-off will pull down bond prices, dealers said. However, traders largely expect the cut-off yield on T-bills to be similar to the previous week's auction as the possibility of a rate hike is weak until the end of the current calendar year, they said.

 

The government will buy back four gilts worth INR 300 billion Monday, the central bank said Tuesday. The buyback auction will be held at 1030-1130 IST Monday. All four gilts at the buyback mature in FY27, which means the government is effectively pre-paying the securities. The gilts up for buyback are the 7.33%, 2026 bond; the 5.74%, 2026 bond; the 8.15%, 2026 bond; and the 8.24%, 2027 bond. No amount has been notified for each of the securities.

 

Traders also await the release of the state borrowing calendar for the September quarter. Higher-than-expected borrowing will pull bond prices down, dealers said. Traders are divided on the size of state borrowing in Jul-Sept. Some expect it 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. Traders expect the state borrowing calendar to be released Thursday or Friday with a quantum between INR 2.60 trillion and INR 3.30 trillion, dealers said.

 

Dealers expect market sentiment to stay positive on the likelihood of stronger foreign inflows, which should add liquidity to the banking system and support bond prices. They said that if the US-Iran peace deal holds, traders may scale back bets on an RBI Monetary Policy Committee rate hike in 2026.

 

Traders remained optimistic that Indian bonds will be added to Bloomberg's flagship Global Aggregate Index. If the inclusion goes ahead, they expect India's Fully Accessible Route bonds to make up 0.8-1.0% of the index. Bloomberg had said in its September consultation note that a weight of 0.7% was under consideration.

 

	TUESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	100.7250	6.8364%	100.6475	6.8473%
6.36%, 2031	99.5050	6.4825%	99.4400	6.4989%
6.68%, 2040	96.0275	7.1321%	95.9700	7.1388%
6.90%, 2065	91.7400	7.5604%	91.4800	7.5829%

 

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India Gilts: Rise more as cut-off yields at state auction better than view

 

	1628 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.76	100.79	100.67	100.68	100.65
YTM (%)	6.8315	6.8273	6.8441	6.8427	6.8473

 

MUMBAI--1628 IST--Prices of government bonds rose to the day's high after the cut-off yields on state bonds at the auction were better than market expectations, dealers said. Bond prices were also supported by likely purchases by foreign portfolio investors, they said. 

 

The Reserve Bank of India set the cut-off yields on states' 10-year bonds at 7.53-7.62%. This was better than the market view, dealers said. Nine states had invited bids to raise INR 169 billion through bond sales. However, Gujarat exercised the green shoe option of INR 5 billion each on its nine-year and 13-year bonds to raise INR 10 billion beyond the notified amount, resulting in a total auction size of INR 179 billion, the auction results showed. 

 

"Gujarat's cut-offs were better than expected," a dealer at a private-sector bank said. "Also, 10-year and 15-year (bonds at the auction) did well at the auction, which is why if you see (bond) prices rise in the secondary market, too." 

 

The auction was the last one for the June quarter and hence saw a firm demand from pension funds, insurance companies, banks, and mutual funds, dealers said. Foreign portfolio investors also likely bought state bonds at the auction, dealers said. Foreign investors were also active in the secondary market and likely bought gilts, which helped bond prices, dealers said. 

 

The total turnover in government securities at 1628 IST was INR 635.60 billion, as against INR 314.20 billion at 1630 IST Monday, data from Clearing Corp. of India showed. The 10-year benchmark 6.94%, 2036 bond is seen in the range of 6.83-6.86% for the rest of the day, dealers said.  (Diksha Tripathy and Shumaila Firoz)

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India Gilts: Remain up on likely FPI buys, fall in crude oil prices

 

	1420 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.72	100.765	100.67	100.68	100.6475
YTM (%)	6.8371	6.8308	6.8441	6.8427	6.8473

 

MUMBAI--1420 IST--Prices of government bonds remained up due to likely purchases by foreign portfolio investors, dealers said. Volumes rose sharply so far Tuesday as market participants took positions due to the possibility of inclusion of India's Fully Accessible Route bonds in the Bloomberg Global Aggregate Index, with some dealers expecting an announcement by the end of this week.

 

The total turnover in government securities at 1420 IST was INR 421.55 billion, as against INR 228.20 billion at 1430 IST Monday, data from Clearing Corp. of India showed. A fall in Brent crude oil prices to the day's low of $76.45 per barrel, the lowest since Mar. 2, also supported the positive market sentiment, dealers said.

 

"(Inclusion of India's Fully Accessible Route bonds to the) Bloomberg Index is expected in two to three days and with (Brent) crude prices below $80 (per barrel), FIIs (foreign institutional investors) are buying today (Tuesday)," a dealer at a state-owned bank said.

 

Foreign investors likely bought long-term bonds Tuesday, anticipating profits after the inclusion of India's bonds in the Bloomberg Global Aggregate Index, dealers said. The RBI added on-the-run 15-, 30- and 40-year benchmark gilts to the fully accessible route on Jun. 5 as part of its measures to attract foreign capital. At 1415 IST, the 30-year benchmark 7.24%, 2055 bond was up 17 paise at INR 97.53. Some state-owned banks were selling floating rate bonds and also picking up long-term gilts, dealers said. 

 

The 2034 floating-rate bond was traded with a volume of INR 4 billion so far Tuesday, with floating rate bonds maturing in 2033 and 2034 being the top traded papers in the reported deals segment of the Negotiated Dealing System – Order Matching platform Monday. These bonds are preferred during a rate-hike cycle for an attractive return as their yields capture increasing policy rates. With fewer rate hikes by the Reserve Bank of India's Monetary Policy Committee priced in for 2026-27 (Apr-Mar), banks sold floating rate bonds from their held-to-maturity books, dealers said.

 

Some dealers expect the yield on the 10-year benchmark 6.94%, 2036 bond to decline to 6.80% this week owing to low crude oil prices and positive domestic market sentiment. Dealers said the slew of measures taken by the RBI and government earlier this month to attract foreign capital inflows supported the upside in bond prices. Others said the 10-year yield needs to fall below 6.825% on a closing basis before it can ease below 6.80%, a level not seen since March. 

 

If the Indian bonds are included in the Bloomberg Global Aggregate Index, dealers expect the yield on the benchmark bond to fall to 6.70%. For the rest of the day, they expect the yield on the 2036 bond to trade at 6.83-6.86%. Demand for state bonds at the INR 169-billion auction is seen strong and the result may lend cues, dealers said.  (J. Navya Sruthi)  

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India Gilts: Rise more as crude eases to near pre-war level; volumes surge 

 

	1215 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.75	100.77	100.67	100.68	100.65
YTM (%)	6.8329	6.8308	6.8441	6.8427	6.8473

 

MUMBAI--1215 IST--Prices of government bonds rose further, tracking an intraday fall in Brent crude oil prices to near pre-war levels, dealers said. At 1142 IST, Brent crude oil futures for delivery in August were at $76.83 per barrel, down from $79.25 per barrel at the end of Indian gilt market trading hours Monday.   

 

Trade volumes surged from the trading session on Monday due to positive market sentiment as the US issued a 60-day licence, allowing Iran to sell oil in the international market, dealers said. At 1215 IST, the total turnover in the government securities market was INR 271.60 billion, as against INR 147.40 billion at 1230 IST Monday, data from Clearing Corp. of India showed. Dealers expect the trading volume in the secondary market to rise further after the result of the auction of state government securities.    

 

Dealers expect the yield on the 10-year benchmark to fall to 6.80% if the US and Iran sign the peace deal. They also expect Brent crude oil prices to fall to $65 per barrel if the two warring nations agree on a peace deal.

 

The market awaits a decision on inclusion of India's Fully Accessible Route bonds to the Bloomberg Global Aggregate Index which was due mid-2026. "Market is expecting the Bloomberg Index inclusion news by next week, so investors are buying ahead of that," a dealer at a private sector bank said.  

 

On Tuesday, nine states are scheduled to raise INR 169 billion through bond sales. The amount is lower than the INR 196.50 billion indicated in the Apr-Jun state borrowing calendar. This is also the last auction for the June quarter. There was firm demand from pension funds, insurance companies, banks, and mutual funds at the auction Tuesday, dealers said. Foreign portfolio investors also likely bought state bonds at the auction, dealers said.

 

Dealers expect the borrowing calendar for state governments for the September quarter to be released by the end of this week. They expect total borrowing by states in the next quarter to be between INR 2.6 trillion and INR 3.2 trillion, against INR 2.55 trillion in the June quarter.  (J. Navya Sruthi)

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India Gilts: Tad up on fall in crude oil prices; profit-booking weighs

 

	0941 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.71	100.72	100.67	100.68	100.65
YTM (%)	6.8385	6.8374	6.8441	6.8427	6.8473

 

MUMBAI--0941 IST--Prices of government bonds rose slightly on an overnight fall in prices of Brent crude oil, dealers said. However, some traders booked profits in early trade, when the yield on the 10-year benchmark 6.94%, 2036 gilt was near 6.84% level, which weighed on bond prices, dealers said. 

 

At 0941 IST, the total turnover in the government securities market was INR 89.65 billion, as against INR 7.35 billion at 0930 IST Monday, data from Clearing Corp. of India showed. Sentiment in the market remained positive, with the US issuing a 60-day licence, allowing Iran to sell oil in the international market while both countries prepare for further negotiations aimed at reaching a permanent peace agreement. The volume in the market is expected to go up in the latter half of the day, after the result of the auction of state government securities. 

 

On Tuesday, a total of nine states are scheduled to raise INR 169 billion through bond sales. The amount is lower than the INR 196.50 billion indicated in the Apr-Jun state borrowing calendar. Demand is seen firm from banks, insurers, pension funds, and foreign portfolio investors, dealers said. The cut-off yields at the auction are likely to lend cues to the gilt market, they said. A lower than estimated cut-off yield may push bond prices higher, dealers said.  

 

Bond prices remained supported by a fall in Brent crude oil prices, dealers said. Brent crude oil futures for August delivery were at $77.53 per barrel at 0941 IST, down from $79.29 per barrel at the end of Indian gilt market hours Monday. 

 

"The market is tracking crude (oil prices)," a dealer at a state-owned bank said. "Crude is down, so we are seeing some positive action. Some profit booking is there in the market, and it will increase if yield (on the 10-year 6.94%, 2036 bond) falls to 6.83%."

 

Traders will closely track any development related to the US-Iran war during the day. The benchmark 10-year 6.94%, 2036 bond is seen in the range of 6.83-6.88% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen tad up as oil prices fall; state bond auction result eyed

 

MUMBAI – Prices of government bonds are seen opening slightly higher Tuesday, tracking an overnight fall in prices of Brent crude oil, dealers said. However, traders may refrain from placing aggressive bets ahead of the state-bond auction, results of which are expected to lend cues to the market, they said.   

 

The 10-year benchmark 6.94%, 2036 is seen opening near 6.83% and moving in a range of 6.83-6.88% during the day, dealers said. The benchmark bond ended at INR 100.65 on Monday, up from INR 100.61 Friday. The yield on the bond settled at 6.8473%, against 6.8533% at the end of the previous trading session. The volume in the market may remain low as traders await more clarity on the final peace agreement between the US and Iran.

 

Market sentiment is expected to remain positive after the US issued a 60-day licence, allowing Iran to sell oil in the international market while both countries prepare for further negotiations aimed at reaching a permanent peace agreement. The development weighed on oil prices in early trade. Brent crude oil futures for August delivery were at $77.84 per barrel at 0730 IST, down from $79.29 per barrel at the end of Indian gilt market hours Monday. 

 

The likelihood of stronger foreign portfolio investment inflows, following measures by the Reserve Bank of India, is also likely to support sentiment, dealers said. Higher inflows are expected to improve liquidity in the banking system, which could provide support to bond prices. Dealers said that if the US-Iran peace deal holds, traders may pare expectations of a rate hike by the RBI's Monetary Policy Committee in 2026.

 

Market participants also await a decision on the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, which is expected to boost foreign inflows, dealers said. If included, India's Fully Accessible Route bonds are expected to account for 0.8-1.0% of the index, they said. In its September consultation note, Bloomberg had said a weightage of 0.7% was under consideration.

 

Some dealers expect the yield on the 6.94%, 2036 bond to decline to 6.60% if India's Fully Accessible Route bonds are included in the Bloomberg Global Aggregate Index and foreign inflows continue. Others, however, expect the 10-year benchmark yield to face resistance near 6.80%, a psychologically important level at which traders may book profits, they said.

 

During the day, bond prices are likely to take cues from results of the state government bond auction, dealers said. Nine states are scheduled to raise INR 169 billion through bond sales on Tuesday. The borrowing amount is lower than the INR 196.50 billion indicated in the Apr-Jun state borrowing calendar.

 

Demand at the auction is expected to remain firm, particularly from banks and long-term investors, dealers said. Banks are likely to buy state bonds maturing in up to 10 years for their asset-liability management books, while bonds maturing in 10-15 years may attract demand for their held-to-maturity portfolios. Insurers and pension funds are also expected to show strong interest in longer-tenor state bonds, dealers said.

 

Some traders expect the spread between cut-off yields on state bonds and comparable gilts to remain broadly unchanged from recent auctions. At the previous state bond auction, the cut-off yield on Assam's 10-year bond was set at 7.66%, implying a spread of 80 basis points over the Centre's 6.94%, 2036 gilt. Dealers expect spreads to remain steady ahead of the release of the state borrowing calendar for the September quarter, which is likely to provide further direction to the market. While some traders expect states' borrowing requirement in the September quarter to be broadly in line with the indicative borrowing programme for the June quarter, others anticipate a higher borrowing quantum.

 

Traders expect the state borrowing calendar to be released Thursday or Friday with a quantum between INR 2.60 trillion and INR 3.30 trillion, dealers said. A sharply higher borrowing quantum will weigh on gilt prices, they said. States have raised INR 1.86 trillion through bonds so far in the June quarter, not counting Tuesday's upcoming auction, against the indicative calendar amount of INR 2.55 trillion.  (Diksha Tripathy)  End

 

US$1 = INR 94.73

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

 

Edited by Rajeev Pai

 

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