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Informist, Friday, Jul. 3, 2026

 

By Janwee Prajapati

MUMBAI – Government bond prices ended slightly higher, likely due to short covering ahead of the weekend, dealers said. Prices recovered from earlier losses after the cut-off price at the weekly gilt auction came in at the upper end of the market's expectations, dealers said. The intraday fall in swap rates and the rupee's rise against the dollar also supported bond prices, dealers said. However, the overnight rise in Brent crude oil prices capped gains, although sentiment remained positive on hopes that Indian bonds would be included in Bloomberg's flagship Global Aggregate Index, dealers said.

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 101.62, up from INR 101.57 Thursday. The yield on the bond settled at 6.7108%, down from 6.7180% at the end of the previous session. The 10-year benchmark bond recovered its intraday losses towards the end of trading on Friday as traders who had likely missed out on the auction supply of the 6.94%, 2036 bond bought it in the secondary market, dealers said. "There was some buying after the auction," a dealer at a public sector bank said. "Cut-off price (on the 6.94%, 2036 bond) was higher, so those who had bid at lower prices likely bought in the secondary market."

 

The total turnover in the gilt market on Friday was INR 617.85 billion, up from INR 581.90 billion on Thursday. Traders confined their trades to the most liquid 10-year benchmark 6.94%, 2036 bond, which accounted for 65% of the total trade volume. Traders refrained from placing aggressive short bets ahead of the weekend as they remained unsure about bond price movements, amid hopes of the inclusion of Indian bonds in the Bloomberg Global Aggregate Index, dealers said. Traders largely expect the inclusion to be announced in the second week of July, as the Bloomberg Index Services committee is likely to meet mid-July to review the inclusion of Indian sovereign bonds.

 

"We are not building too much position," a dealer at a private sector bank said. "There is no point in shorting (placing short bets) at these levels because prices will rise due to inclusion (inclusion of Indian bonds in the Bloomberg flagship index), which is likely to be before Jul. 20." 

     

At the auction, the Reserve Bank of India set a cut-off price of INR 101.50 for the 6.94%, 2036 bond, slightly higher than the market expectation of INR 101.48 in an Informist poll. Demand at the auction was robust from public sector banks, which likely bought around INR 10 billion to INR 15 billion of the auction supply, dealers said. Foreign participants also showed interest in the 10-year benchmark bond, particularly after offloading INR 17.68 billion of the gilt in the secondary market on Thursday, dealers said. Mutual funds and private sector banks also likely picked up the bond, they said. The central bank accepted only 171 bids, about 40% of the total, with a bid cover ratio of over 2.

 

Given the current scenario, traders expect the yield on the 10-year benchmark to move within a 6.70-6.75% range in the upcoming week, dealers said. Traders expect the yield on the 6.94%, 2036 bond, to fall to 6.60% if Indian bonds are included in Bloomberg's flagship index, whereas it is likely to rise to 6.80% if the war in West Asia escalates, dealers said. "If there is an announcement of an inclusion, we can see a 12 basis point rally (fall in bond yield), whereas if there is any negative news from the US-Iran (war), then there can be an 8 basis points hardening (rise in bond yield)", a dealer at another private sector bank said.         

 

Traders largely expect the yield curve to steepen, with a fall in short-term bond yields and a rise in long-term bond yields, dealers said. Some traders expect short-term bonds to rally by about 20–30 paise, supported by RBI norms that are expected to boost inflows into the banking system, dealers said. Long-term bond yields are likely to remain under pressure due to limited demand from long-term participants, dealers said. Some traders expect such a steepening by September. Long-term bond prices ended down Friday, with bond volumes lower than in previous sessions, as some traders booked profits after the recent sharp price rise, dealers said.

 

OUTLOOK

On Monday, bond prices will track overnight movements in US Treasury yields, which are likely to open lower in early Asian trade after the monthly US jobs report for June, released after Indian market hours on Thursday, showed job gains were lower than expected. US markets are closed on Friday. Any significant movement in Brent crude oil prices will also provide cues, dealers said.

 

Traders are also likely to remain cautious ahead of the release of India's June inflation data, dealers said. Traders await the release of India's June inflation data, which is expected to be on the higher side, reflecting the rise in energy prices, the dealer said. Deficient southwest monsoon rainfall will also contribute to higher inflation, dealers said. CPI inflation for June will be released on Jul. 13.  

 

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.

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	98.1800	6.7457%	98.1750	6.7463%
6.94%, 2036	101.6200	6.7108%	101.5700	6.7180%
6.36%, 2031	99.8050	6.4073%	99.8200	6.4033%
6.68%, 2040	97.5100	6.9612%	97.6200	6.9483%
6.90%, 2065	93.2000	7.4361%	93.4800	7.4126%

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India Gilts: Steady on caution ahead of weekend; traders avoid short bets

 

	1602 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.54	101.59	101.45	101.55	101.57
YTM (%)	6.722	6.715	6.7341	6.7206	6.718

 

MUMBAI--1602 IST--Prices of most government bonds were steady after the auction of the benchmark 10-year bond. The cut-off price was at the higher end of market expectations, dealers said. Traders said the auction did not alter their outlook on the trajectory of bond prices, with sentiment remaining positive amid hopes that Indian bonds will be included in Bloomberg's flagship Global Aggregate Index.  

 

"The auction was in line with market expectations, so there was no negative surprise for the market," a dealer at a private-sector bank said. "Unless there is a fresh trigger, such as Bloomberg index inclusion, yields are likely to remain in the current range next week." 

 

Traders refrained from building aggressive short positions ahead of the weekend, as they expect prices to remain supported in the near term, dealers said. Market participants are reluctant to bet against the market because any positive development on the inclusion of gilts in the flagship Bloomberg index could push bond prices higher, they said. Steady crude oil prices also supported sentiment, easing inflation concerns and reducing the likelihood of immediate upward pressure on bond yields, dealers said. Long-term bond prices were down, with bond volumes lower than in previous sessions, as some traders booked profits after the recent sharp price rise, dealers said. 

 

The benchmark 10-year 6.94%, 2036 bond is expected to close at a yield of around 6.71%, dealers said. The total turnover in the government securities market at 1602 IST was INR 441.95 billion, lower than INR 482.35 billion at 1530 IST Thursday, data from Clearing Corp. of India Ltd. showed.   (Shumaila Firoz) 

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India Gilts: Recover most losses on higher-than-view cut-off price at auction

 

	1421 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.52	101.59	101.45	101.55	101.57
YTM (%)	6.7247	6.7150	6.7341	6.7206	6.7180

 

MUMBAI--1421 IST--Prices of government bonds recovered most of the earlier losses as the cut-off price at the auction was at the higher end of market expectations, dealers said. Bond prices were down earlier on expectations of a lower cut-off price at auction, they said. Traders refrained from placing aggressive bets due to caution ahead of the weekend, which kept trading volumes low, they said.  

 

"Cut-off (cut-off prices on 6.94%, 2036 bond) are on the higher side of expectation," a dealer at a primary dealership said. "The market recovered because such a large quantum was taken at good levels." 

 

At the auction, the Reserve Bank of India set a cut-off price of INR 101.50 on the 6.94%, 2036 bond, which was slightly higher than the market expectation of INR 101.48, according to the media in an Informist poll. Demand at the auction was firm from public sector banks as they likely bought around INR 10 billion to INR 15 billion of the auction supply, dealers said. Some foreign participants were also likely interested in buying the 10-year benchmark bond, more so after they sold INR 17.68 billion of the gilt in the secondary market on Thursday, dealers said.

 

Traders refrained from placing aggressive short bets ahead of the weekend amid hope of the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, dealers said. Traders largely expect bond prices to rise going ahead, supported by improving foreign inflows, they said.

 

However, traders do not expect the yield on the 10-year benchmark bond to fall below the crucial level of 6.70%, dealers said. Public sector banks are likely to remain on the sidelines as they will refrain from booking profits above 6.70%, dealers said. Some traders expect the 10-year benchmark bond to close around 6.71%.

 

The total volume in the government securities market at 1421 IST was INR 349.65 billion, against INR 409.80 billion at 1430 IST Thursday, data from Clearing Corp. of India Ltd. showed. Traders will also 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 6.68-6.77% range during the day, dealers said. (Janwee Prajapati)

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India Gilts: In thin band; demand at auction seen firm, result to lend cues

 

	1136 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.54	101.59	101.48	101.55	101.57
YTM (%)	6.722	6.7154	6.7303	6.7206	6.718

 

MUMBAI--1136 IST--Prices of government bonds traded in a thin band as traders remain cautious ahead of the weekly gilt auction result, dealers said. A slight intraday rise in Brent crude oil prices weighed on bond prices, they said. Hopes of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index kept market sentiment afloat, limiting losses.

 

At the INR-340-billion weekly gilt auction, demand is seen robust from public sector banks, dealers said. Traders expect state-owned banks to absorb INR 150 billion to INR 170 billion, which is about 50% of the total fresh supply, after these banks sold bonds at attractive levels earlier. Public sector banks sold INR 11.42 billion of gilts on Thursday. Private sector banks also likely picked up the bond at the auction, they said. However, some traders said cut-off prices could be marginally lower, as recent short-covering in the secondary market may weigh on demand at auction.

 

"There is likely to be around 1 basis point tail (higher cut-off yield) because of large supply," a dealer at a private sector bank said. "The overall sentiment is still positive...but we could see bidding at 46-45 (cut of price on 6.94%, 2036 101.45-101.46) also."   

 

With nearly half the fresh supply likely to be absorbed by state-owned banks, traders do not expect the large INR 340-billion auction to halt the positive momentum in the secondary market. Traders and "weaker hands" are unlikely to get a large quantum of auction stock, limiting selling pressure after the result, dealers said. However, a lower than expected cut-off price may signal fatigue among buyers after the sharp rise in prices over the past month. This may hurt the outlook for upcoming auctions and have a significant impact on market momentum, they said.

 

Overall market sentiment remained positive with traders expecting inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index, dealers said. The Bloomberg Index Services committee is likely to meet mid-July to review the inclusion of Indian sovereign bonds. Such an inclusion could lead to a fall in the 6.94%, 2036 bond yield to 6.65–6.60%, dealers said.

 

The total volume in the government securities market at 1136 IST was INR 138.05 billion, only about 55% of INR 251.05 billion at 1130 IST Thursday, data from Clearing Corp. of India Ltd. showed. Trade volume remained subdued ahead on caution ahead of auction results, dealers said. Traders will also 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 6.68-6.77% range during the day, dealers said. (Janwee Prajapati)

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India Gilts: Steady on caution ahead of gilt auction; rise in crude weighs

 

	0943 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.555	101.59	101.48	101.55	101.57
YTM (%)	6.7199	6.7154	6.7303	6.7206	6.718

 

MUMBAI--0943 IST--Prices of government bonds were steady as traders maintained caution ahead of the weekly gilt auction Friday, the result of which is expected to lend cues to the market, dealers said. However, an overnight rise in prices of Brent crude oil weighed on bond prices, dealers said. 

 

The 10-year benchmark 6.94%, 2036 bond opened steady Friday at INR 101.55, against Thursday's close of INR 101.57, but fell in early trade to INR 101.48 as some traders trimmed positions ahead of the weekend amid no clarity on the US-Iran peace talks, dealers said. However, hopes of inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index helped bond prices, they said. Traders remain optimistic that Indian sovereign bonds will be added to the index, they said.

 

An overnight rise in prices of Brent crude oil pulled down bond prices, dealers said. Brent crude oil for September delivery was at $72.21 per barrel at 0930 IST, up from $70.38 per barrel at the end of Indian gilt market hours Thursday.

 

"Crude is falling again today (Friday), that's why we fell in early trade," a dealer at a primary dealership said. Now before the weekend, there is some selling, too, so that's also weighing (on bond prices), but people are waiting for the auction (result)."

 

Traders will closely track the result of the INR-340-billion auction of the 10-year benchmark 6.94%, 2036 paper Friday, dealers said. Dealers expect the auction to go through, with some people expecting the bond yield to fall to 6.68% in the near term, they said. However, traders expect the cut-off yield for the 2036 paper at the auction to be slightly higher than the secondary market level, as traders who had placed short bets on the bond earlier to cover at the auction at lower prices, have already covered these positions in the secondary market with the yield on the 10-year paper falling to near 6.70% levels. This might dampen demand at the auction, dealers said. State-owned banks are likely to bid for the bond at the auction, though it may not be aggressive this time around, dealers said. 

 

The total volume in the government securities market at 0930 IST was INR 45.15 billion, as against INR 64.30 billion at 0930 IST Thursday, data from Clearing Corp. of India Ltd. showed. Friday, 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 6.70-6.78% range during the day, dealers said. (Diksha Tripathy)

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India Gilts: Seen dn as crude rises; INR-340-bln auction result to lend cues

 

MUMBAI – Prices of government bonds are seen opening lower Friday, tracking an overnight rise in prices of Brent crude oil, dealers said. Traders may place short bets ahead of the INR-340-billion weekly gilt auction, hoping to cover these bets at the auction, which is likely to weigh on bond prices, they said. Some traders may trim positions ahead of the weekend amid no clarity over US-Iran peace talks, which may pull down gilt prices Friday, dealers said. 

 

The 10-year benchmark 6.94%, 2036 is seen opening near 6.73% yield and is expected to move between 6.70-6.78% during the day. The bond had ended at INR 101.57 Thursday, up from INR 101.30 Wednesday. Its yield settled at 6.7180%, the lowest close since Mar. 17, against 6.7563% at the end of the previous session. 

 

Trade volume in the market is likely to rise later in the day, following the announcement of the result of the auction Friday, dealers said. The government will sell INR 340 billion of the 6.94%, 2036 bond, bids for which are to be submitted between 1030 IST and 1130 IST. Dealers expect firm demand across market segments at the auction, they said. However, some traders said cut-off prices could be marginally lower, as recent short-covering of the 2036 bond in the secondary market may dampen auction demand. Moreover, the large supply is likely to weigh on the cut-off price for the bond, dealers said. 

 

A few traders are likely to stay on the sidelines, wary of buying at higher levels, dealers said. 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, they said. 

 

Bond prices are likely to be pulled down due to an overnight rise in crude oil prices, dealers said. At 0730 IST, Brent crude oil futures for September delivery were at $72.08 per barrel, up over 2% from the close of Indian gilt market hours Thursday. On the global front, traders will track crude oil prices and any developments in the US-Iran peace talks for cues, they said.

 

Traders will also assess the US non-farm payrolls number for June, released after market hours Thursday, which 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 fell to 4.2% in June from 4.3% in May as workers exited the labour force, taking the participation rate to its lowest level in more than five years. This has dimmed expectations of an immediate rate hike by the Federal Reserve. 

 

Back home, traders will also track any announcement or development related to the inclusion of Indian bonds in Blommberg's flagship Global Aggregate Index, dealers said. Traders remain optimistic that Indian sovereign bonds will be added to the index, they said. A report by The Economic Times on Thursday said the Bloomberg committee is likely to meet mid-July for the review. This led to a rise in bond prices amid improved sentiment in the market Thursday. Traders say if the inclusion proceeds, India's Fully Accessible Route bonds will 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

 

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.

 

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