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Informist, Thursday, Jul. 2, 2026

 

By Janwee Prajapati

 

MUMBAI – Government bond prices ended sharply higher Thursday as traders were hopeful of the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, which boosted market sentiment, dealers said. Moreover, the price of Brent crude oil falling below pre-war levels throughout the trading session Thursday also supported bond prices, they said. The rise in the 10-year benchmark US Treasury yields weighed on bond prices, dealers said. Traders, however, refrained from building aggressive positions ahead of the release of US non-farm payrolls data after Indian market hours and the weekly gilt auction Friday, they said.

 

"We were up because of the news that Bloomberg will review the inclusion of Indian bonds (in its Global Aggregate Index)," a dealer at a small finance bank said. "... and the 10-year bonds outperformed because of some short-covering. Inflows from the inclusion might come later, but the improved sentiment is seen in these bonds earlier."

The 10-year benchmark 6.94%, 2036 bond ended at INR 101.57, up from INR 101.30 Wednesday. The yield on the bond settled at 6.7180%, the lowest closing level since Mar. 17, against 6.7563% at the end of the previous session. The yield on the 10-year benchmark bond oscillated between 6.71% and 6.74% during Thursday's session as traders refrained from building aggressive positions on caution ahead of the INR 340-billion weekly gilt auction, dealers said. Furthermore, traders remained cautious ahead of the release of US economic data, which are likely to influence the US Federal Reserve's decision on whether to hike interest rates, dealers said. A rise in US policy rates will nudge the Reserve Bank of India's Monetary Policy Committee to raise the repo rate, dealers said.     

 

The total turnover in the gilt market was INR 581.90 billion, up from INR 504.80 billion Wednesday. Trade volume in the secondary market was likely led by intraday trades, dealers said. Public-sector banks are likely to have sold some of their positions as the yield on the 10-year benchmark bond hit the day's low of 6.71%, dealers said. Some traders said these banks are likely to have bought the bond for their trading books. Traders expect the yield on the 10-year benchmark bond to fall to 6.65% if the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index happens, dealers said. Others, however, expect the market to hold the 6.68% level on the 10-year bond as it is historically crucial.

 

"PSUs (public-sector banks) only bought (bonds) for their trading books," a dealer at a public-sector bank said. "We are expecting a strong resistance at 6.70% (yield on the 10-year benchmark), so we are selling some positions near that level... if inclusion (inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index) happens, then we can see below 6.70%."

 

The 10-year benchmark bond outperformed other bonds as traders covered short bets placed on the bond ahead of its auction Friday as they expect the price to rise, dealers said. Traders expect a rise in bond prices going ahead on hopes of inclusion of Indian bonds in Bloomberg's Global Aggregate Index, dealers said.

 

The hopes got a boost after The Economic Times reported that the Bloomberg Index Services committee is likely to meet mid-July to review the inclusion of Indian sovereign bonds. The 6.94%, 2036 bond price also got support from likely purchases by foreign portfolio investors, dealers said. Foreign participants are also likely to have bought securities maturing in more than 10 years, they said.

 

Movement in the 15-year benchmark 6.68%, 2040 bond was limited despite it having the second-highest trading volume on the day, as traders expect the introduction of a new 15-year bond, dealers said. The 6.68%, 2040 bond saw trade volume of INR 97.50 billion in the secondary market Thursday, almost 17% of the total trade volume. The 6.94%, 2036 bond accounted for 57% of the total trade volume.

 

Dealers expect firm demand across market segments at Friday's weekly gilt auction. However, some traders said cut-off prices could be marginally lower, as recent short-covering in the secondary market may reduce auction-day demand. Moreover, the large supply is likely to weigh on the cut-off price, dealers said. A few traders are likely to stay on the sidelines, wary of buying at higher levels, dealers added. At the same time, other dealers expect secondary market prices to firm up, which could encourage bidders to seek lower auction prices and sell their allotted stock in the secondary market after the auction. The government will raise INR 340 billion through the 6.94 36bond at the auction.

 

OUTLOOK

On Friday, bond prices will track overnight movement in US Treasury yields and any significant movement in Brent crude oil price, dealers said. However, the INR 340-billion supply of the 6.94%, 2036 bond is likely to weigh on bond prices. Traders are likely to remain cautious ahead of the result of the weekly gilt auction. 

 

The US non-farm payrolls number for June, released after market hours Thursday, was lower than expected. Non-farm payroll employment increased by 57,000, down from the downwardly revised 129,000 jobs added in May. The unemployment rate was 4.2%, against 4.1% a year ago.

 

Traders also eye the INR 340-billion supply of the 6.94%, 2036 bond at auction, which is likely to limit a fall in its yield, dealers said. They remain optimistic that Indian sovereign bonds will be added to Bloomberg's flagship Global Aggregate Index. If the inclusion proceeds, they expect India's Fully Accessible Route bonds to account for 0.8-1.0% of the index. Bloomberg had said in its September consultation note that a weight of 0.7% was under consideration.

 

	THURSDAY		WEDNESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	98.1750	6.7463%	97.9600	6.7782%
6.94%, 2036	101.5700	6.7180%	101.2950	6.7563%
6.36%, 2031	99.8200	6.4033%	99.7475	6.4216%
6.68%, 2040	97.6200	6.9483%	97.4700	6.9655%
6.90%, 2065	93.4800	7.4126%	93.3600	7.4227%

 

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India Gilts: Up on Bloomberg index inclusion hope, traders await auction Fri 

 

	1553 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.57	101.61	101.40	101.41	101.30
YTM (%)	6.718	6.7128	6.7416	6.7409	6.7563

 

MUMBAI--1553 IST--Prices of government bonds remained higher Thursday, supported by positive sentiment over the potential inclusion of Indian government bonds in Bloomberg's flagship Global Aggregate Index and continued buying by foreign portfolio investors, dealers said. Traders said overseas investors were largely buying longer-tenure bonds, which kept sentiment firm despite caution ahead of the weekly gilt auction Friday.

 

However, market participants refrained from building aggressive positions ahead of Friday's auction, keeping trading volumes largely steady. "Volumes are steady and not very high because people are waiting for tomorrow's (Friday's) auction and don't want to bid aggressively," a dealer at a public sector bank said. Foreign investors likely bought bonds maturing in more than 10 years, dealers said. 

 

Dealers expect healthy demand at the weekly auction on Friday. "The cut-off yield on the 10-year benchmark paper is likely to be good, movement might be between 5-7 paise (cut-off price) at the auction, with strong participation expected across investor categories due to the positive sentiment," a dealer at another public sector bank said. 

 

The total turnover in the government securities market at 1553 IST was INR 497.45 billion, higher than INR 415.250 billion at 1530 IST Wednesday, data from Clearing Corp. of India Ltd. showed. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the range of 6.70-6.74% during the day, dealers said.  (Shumaila Firoz) 

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India Gilts: Remain sharply up on hope of inclusion in Bloomberg index

 

	1156 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.54	101.59	101.40	101.41	101.30
YTM (%)	6.7221	6.7152	6.7416	6.7409	6.7563

MUMBAI--1156 IST--Prices of government bonds remained higher as traders were hopeful of the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, which supported market sentiment, dealers said. The rise in bond prices was also supported by slight easing of Brent crude oil prices, which remained below pre-war levels, dealers said. Traders, however, refrained from building aggressive positions ahead of the weekly gilt auction and release of US non-farm payrolls data post market hours.

 

The 10-year bond prices rose more than other bonds as traders rushed to cover their short bets on the bond due to expectations of a rise in bond prices fuelled by news related to inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index. Hopes of index inclusion rose after The Economic Times reported that the Bloomberg Index Services committee is likely to meet mid-July to review the inclusion of Indian sovereign bonds in its Global Aggregate Index. The 10-year 6.94%, 2036 and 6.48%, 2035 bonds together accounted for nearly 66% of the total trade volume. The movement in the 15-year benchmark 6.68%, 2040 bond was limited despite it having the second-highest trading volume, as traders expect the introduction of a new 15-year bond, dealers said. 

 

"Most of the volume was seen in early trade, and it's steady now," a dealer at a public sector bank said. "People must have covered their short positions due to Bloomberg inclusion news. At these volumes, slight movement will also cause significant price action."

 

However, this is likely to lead to higher cut-off yields at the weekly gilt auction Friday due to less demand for short covering at the auction, dealers said. Some traders also expect the large quantum of INR 340 billion to weigh on cut-off prices at the auction. The government will sell INR 340 billion of the 6.94%, 2036 bond at its auction Friday. 

 

Public sector banks likely remained on the sidelines after buying INR 43.28 billion of gilts in the secondary market Wednesday. The yield on the benchmark 10-year, 6.94%, 2036 bond is expected to move in the range of 6.70–6.75% during the day, dealers said. Traders expect the yield on the 10-year benchmark bond to fall below 6.70% only if there is any clarity on the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, dealers said. The total turnover in the government securities market at 1156 IST was INR 286.35 billion, against INR 216.45 billion at 1130 IST Wednesday, data from Clearing Corp. of India Ltd. showed.  (Janwee Prajapati)

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India Gilts: Sharply up on fall in oil prices, Bloomberg index inclusion hope

 

	0932 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.5175	101.53	101.40	101.41	101.30
YTM (%)	6.7253	6.7235	6.7416	6.7409	6.7563

 

MUMBAI--0932 IST--Prices of government bonds rose, tracking an overnight fall in prices of Brent crude oil, dealers said. Traders were also hopeful of the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, which supported market sentiment, they added. 

 

Hopes of index inclusion rose after The Economic Times reported that the Bloomberg Index Services committee is likely to meet mid-July to review the inclusion of Indian sovereign bonds in its Global Aggregate Index. An approval for the index is likely, the news report said, quoting a senior foreign bank official. 

 

A final approval to include the bonds in the Bloomberg index could pull the 10-year 2036 bond yield down to 6.60% levels, dealers said. If the inclusion proceeds, they expect India's Fully Accessible Route bonds to account for 0.8-1.0% of the index. Bloomberg had said in its September consultation note that a weight of 0.7% was under consideration. 

 

Optimism in the market around the inclusion of Indian bonds in the index lifted the turnover in the government securities market Thursday, dealers said. The total volume in the market at 0930 IST was INR 64.30 billion, up from INR 50.35 billion at 0930 IST Wednesday, data from Clearing Corp. of India Ltd. showed. 

 

A fall in prices of Brent crude oil also supported bond prices, dealers said. Brent crude oil for September delivery was at $70.69 per barrel at 0930 IST, down from $72.31 per barrel at the end of Indian gilt market hours Wednesday.

 

"Mostly, rise (in bond prices) is due to crude," a dealer at a state-owned bank said. "Crude has come down to 70 ($70 per barrel) again. News of the Bloomberg index inclusion is also a positive for the market and is fuelling some optimism."     

 

Traders are likely to trim positions Thursday to make room for fresh supply of the 6.94%, 2036 bond at the auction this week, which may put further pressure on bond prices, dealers said. The government will sell INR 340 billion of the benchmark 10-year bond at an auction Friday.

 

On Thursday, traders will continue to monitor developments related to the situation in West Asia, as any movement in crude oil prices could influence bond yields. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.71-6.78% range during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen up on overnight fall in oil prices; US jobs data in focus

 

MUMBAI – Prices of government bonds are seen opening higher on Thursday due to an overnight fall in prices of Brent crude oil, dealers said. Traders may remain cautious ahead of the release of the US non-farm payrolls data later on Thursday, which is likely to give cues to US Treasury yields, which in turn may lend direction to Indian bond yields, they said.    

 

The 10-year benchmark 6.94%, 2036 bond is seen opening near 6.74% and will likely move between 6.72% and 6.78%, dealers said. The 2036 bond ended at INR 101.30 Wednesday, down from INR 101.34 Tuesday. Its yield settled at 6.7563%, against 6.7501% at the end of the previous session. 

 

Traders are likely to book profits if the yield on the 10-year benchmark bond falls below 6.72%, which may put pressure on bond prices, dealers said. Some traders may also trim their bond holdings to make room for fresh supply ahead of the auction of the 10-year benchmark bond Friday, they said. Traders may also place short bets on the 6.94%, 2036 bond Thursday, hoping to cover it at the auction, dealers said. Hence, the 10-year benchmark bond is likely to remain under pressure during the trading session Thursday, dealers said. The government will sell INR 340 billion of the 6.94%, 2036 bond at the auction Friday.

 

Bond prices are likely to be supported by an overnight fall in Brent crude oil prices, dealers said. Brent crude oil futures for September delivery traded at $70.89 per barrel, down from $72.31 per barrel at the end of Indian gilt market hours Wednesday. During the day, bond prices will closely track movements in crude oil prices, dealers said.  

     

Traders will also track movement in US Treasury yields Thursday, they said. US yields edged higher late Wednesday as investors assessed remarks by Federal Reserve Chair Kevin Warsh. In a discussion at the European Central Bank panel in Sintra, ‌Portugal, Warsh said he would stick firmly to the US central bank's 2% inflation target and "disappoint" anyone who expects a loose monetary policy despite US President Donald Trump's call for interest rate cuts, reported Reuters. 

 

Signs of tightening in US monetary policy may also provide some guidance to the Reserve Bank of India's Monetary Policy Committee to raise the repo rate, dealers said. Market participants will also focus on the US non-farm payrolls report, which is expected to provide further direction to Treasury yields and US monetary policy, they said. 

 

Traders also await the release of India's inflation data, which is expected to be on the higher side due to elevated oil prices stemming from the West Asia war, dealers said. Lower rainfall conditions will also contribute to higher inflation, which may lead to policy tightening by the MPC, dealers said. CPI inflation data for June will be released on Jul. 13.

 

Traders eagerly await any announcement related to the inclusion of the bonds, which could pull the 10-year 2036 bond yield down to 6.60% levels, they said. Traders remain optimistic that Indian sovereign bonds will be added to Bloomberg's flagship Global Aggregate Index. If the inclusion proceeds, they expect India's Fully Accessible Route bonds to account for 0.8-1.0% of the index. Bloomberg had said in its September consultation note that a weight of 0.7% was under consideration. (Diksha Tripathy) 

 

End

 

US$1 = INR 95.39

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

 

Edited by Rajeev Pai

 

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