More Stories

Informist, Wednesday, Jul. 1, 2026

 

By Cassandra Carvalho

 

MUMBAI – Aggressive profit sales in the last hour of trade Tuesday dented strong buying momentum and has dimmed the likelihood of the 10-year benchmark bond recouping its losses seen during the West Asia conflict, dealers said. Prior to Tuesday, a five-session fall in government bond yields had paved the path for the 10-year benchmark gilt yield to fall to 6.66%, its last traded yield before the US and Iran launched strikes in the Gulf late February. Some traders were betting on a fall to 6.60% in the near-term. However, when the 10-year 6.94%, 2036 bond yield was at its day's low Tuesday – down five basis points – a sudden bout of hefty sales wiped out price gains across tenures and that view dissipated. 

 

The 10-year benchmark 6.94%, 2036 bond yield zoomed back to end flat at the key 6.75% yield Tuesday—the last day of the June quarter, having fallen below the crucial 6.70% level earlier in the session for the first time in 15 weeks. Prior to Tuesday, the yield had fallen 10 bps over five consecutive sessions. The price action was subdued in the 10-year benchmark Wednesday, and some traders preferred other tenures such as long-term bonds. The bond yield ended at 6.7563% Wednesday. 

 

"After 10 to 11 days of buying, from a one-way move we've gone to a sideways move, which is what we saw in 10-year today (Wednesday)," a dealer at a private sector bank said. "I think it'll (10-year yield) trade in the 72-75 (6.72-6.75% yield) space only, it'll need a strong reason to break 6.70% or 6.75%."

 

A large mutual fund sold gilts Tuesday to book profit in the June quarter, dealers said. Mutual funds were the largest net sellers of gilts in the secondary market Tuesday, with net sales of INR 21.87 billion, as per data from Clearing Corp. of India. Quarter-end redemptions may have added to the selling pressure, dealers said. In the run-up to Tuesday, this segment had net bought gilts worth INR 38.49 billion in the previous five sessions.  

 

Following the first bout of sales around 1600 IST Tuesday, traders with large intraday positions were forced to cut their long bets, they said. Technical levels had a part to play, as the 10-year benchmark yield failed to sustain a fall below its 200-day moving average of 6.70%, dealers said. Traders had hit their targets at this yield, and began to book profits. The large INR-340-billion supply of the 6.94%, 2036 bond Friday also limited a fall in the bond's yield this week, they said.

 

"Now this week, we (the 6.94%, 2036 bond yield) will trend towards 6.80%, then depending on how auction goes, we could see a rally again," a dealer at another private sector bank said. Before Tuesday, the dealer had expected a fall in the 2036 bond yield to 6.60%.  

 

The sharp reversal in yields triggered by the hefty sales highlighted the lack of depth and appetite for bonds at lower yields, dealers said. The rise in prices was overdone, and bucking the trend was due, some dealers said. None of the 19 participants polled by Informist Jun. 1 had expected the 10-year benchmark bond yield to end the month lower than 6.82%. The 6.94%, 2036 bond yield fell about 23 bps in June.

  

Some still expect that sustained bond purchases by FPIs and inflows into foreign currency non-resident bank deposits will pull the 10-year bond yield to a sustained fall below 6.70% this quarter. A fall in oil prices and recent commentary from the Reserve Bank of India officials has led to traders pricing out the possibility of rate hikes by the Monetary Policy Committee in August or October. An inclusion of India's fully accessible route bonds on Bloomberg's Global Aggregate Index—the review of which is expected this month—could also trigger a fall below 6.70%, they said. Others believe that the window for such a fall in yields is narrow, before the inflationary impact of El Nino creeps in and the RBI has to step in to drain liquidity. 

 

"Slowly, it will go to 6.60%, but it will take time. For now, 6.70% won't break so easily," the head of treasury at a public sector bank said.   End

 

Edited by Deepshikha Bhardwaj

 

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.