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Informist, Monday, Jul. 6, 2026

 

By Cassandra Carvalho

 

MUMBAI – Government bond prices ended higher across tenures on Monday, with short-term bonds picking up after underperforming other tenures last week. The rise in prices of bonds maturing in 30 to 50 years was relatively lower. A fall in US Treasury yields and purchases by foreign portfolio investors aided a rise in bond prices. Momentum to buy bonds returned as the yield on the 10-year benchmark 6.94%, 2036 bond fell below the crucial 200-day moving average of 6.70% and ended at its lowest since Mar. 13. The yield is seen falling to 6.65% in the near term, which would be below 6.66% seen before the West Asia war began, on bets of gilts being included in Bloomberg's flagship Global Aggregate Index.  

 

However, gains were capped as traders, especially those from state-owned banks, sold gilts at a profit, given that the 10-year yield fell to 6.6771% Monday, its lowest in 16 weeks. The 10-year benchmark 6.94%, 2036 bond ended at INR 101.81, up from INR 101.62 Friday. The yield on the bond settled at 6.6851%, down from 6.7108% at the end of the previous session. The five-year benchmark 6.36%, 2031 bond ended 16 paise higher at INR 99.97, which translated into a 4-basis-point fall, the steepest single-day fall in nearly two weeks. 

 

"Maybe we can fall to 6.62% (yield on the 10-year benchmark) before 15th (Jul. 15) itself, before the Bloomberg news comes. It could go to 6.62% once and rebound, and if Bloomberg does include (Indian gilts in its flagship index), we could go to lower than 6.60% as a reaction but 6.60% should hold," a dealer at a state-owned bank said.

 

The yield on the 10-year US Treasury note was 4.46% at 1700 IST, down from 4.49% Friday. Private sector banks covered short bets in gilts, and state-owned banks reduced the pace of profit sales, dealers said. Foreign portfolio investors net purchased gilts worth INR 8.58 billion through the Fully Accessible Route Monday, data from Clearing Corp. of India showed as of 1800 IST.

 

Traders also pared any fears of additional market borrowing by the Centre this financial year, fears that had cropped up during the West Asia war as it bore high oil costs, with Brent oil prices stabilising at around their pre-war levels, dealers said. Traders also assessed reports of India's rainfall deficit decreasing, which abated some fears of higher-than-4% consumer inflation in the rest of FY27, dealers said. Some dealers still remain cautious of El Nino impacting the monsoon later this year, and some expect erratic rainfall in different parts of the country. 

 

"I think monsoon should be fine now, it arrived late but I think it won't cause that much of (upward) pressure on food prices later on," a dealer at another state-owned bank said.  

 

OUTLOOK

On Tuesday, bond prices will track overnight movements in US Treasury yields. Any significant movement in Brent crude oil prices will also provide cues, dealers said. However, domestic focus will be largely on foreign inflows and any news regarding the inclusion of Indian bonds in the Global Aggregate Index. Traders expect Bloomberg to publish its review between Jul. 15 and the end of the month. Most traders expect an inclusion, though some technical difficulties for FPIs purchasing bonds persist, dealers said. Traders will also track the result of the INR-213.50-billion state bond auction Tuesday. Most of the bonds being issued mature in more than 10 years.  

 

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 data for June will be released on Jul. 13.  

 

	MONDAY		FRIDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.8050	6.6851%	101.6200	6.7108%
6.48%, 2035	98.4050	6.7123%	98.1800	6.7457%
6.36%, 2031	99.9650	6.3667%	99.8050	6.4073%
6.68%, 2040	97.8500	6.9223%	97.5100	6.9612%
6.90%, 2065	93.2775	7.4296%	93.2000	7.4361%

 

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India Gilts: Rise on intraday fall in US yields; profit-taking caps gains

 

	1631 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.8125	101.86	101.8625	101.64	101.62
YTM (%)	6.6841	6.6771	6.7080	6.7080	6.7108

 

MUMBAI--1631 IST--Government bond prices rose to near the day's high after briefly giving up gains, tracking an intraday fall in US Treasury yields, dealers said. However, traders booked profit after the yield on the 10-year benchmark 6.94%, 2036 bond fell below 6.70%, weighing on bond prices, they said. 

 

The yield on the 10-year benchmark US Treasury note at 1630 IST was 4.46%, down from 4.47% at 0900 IST and 4.50% at the end of Indian gilt market hours Friday. Meanwhile, Brent crude oil futures for September delivery continued to trade near $72 per barrel with no fresh cues on the US-Iran peace talks front. Dealers await a final peace deal between the two nations, which could bring Brent crude oil prices down to below $70 per barrel.      

 

The total volume in the government securities market at 1630 IST was INR 721.85 billion, up from INR 506.70 billion at the same time on Friday, data from Clearing Corp. of India Ltd. showed. Traders attributed the higher market volume to purchases by private-sector banks at levels seen as attractive, dealers said. Hopes of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index also kept market sentiment positive, dealers said.

 

Some traders booked profits when the yield on the 10-year benchmark 6.94%, 2036 bond neared 6.68% level, its lowest since Mar. 13, 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 6.65-6.70% range during the day, dealers said. (Diksha Tripathy)

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India Gilts: Give up some gains on profit-taking; lower US yields help

 

	1509 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.76	101.86	101.64	101.64	101.62
YTM (%)	6.6920	6.6771	6.7080	6.7080	6.7108

 

MUMBAI--1509 IST--Prices of government bonds gave up some gains as traders booked profits when the yield on the 10-year benchmark 6.94%, 2036 bond fell below 6.70%, dealers said. However, bond prices remained supported Monday on hope of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index, dealers said. An intraday fall in US Treasury yields and crude oil prices also continued to support bond prices, they said. 

 

The yield on the 10-year benchmark 6.94%, 2036 bond hovered around 6.68%, after falling nearly 3 basis points from Friday's close. Dealers said they prefer the 10-year benchmark gilt over other tenures as it is the most liquid segment of the yield curve, they said. The movement in shorter-tenure bonds is limited now, after its recent surge on the back of measures announced by the Reserve Bank of India. Dealers said the five-year 6.36%, 2031 bond has already seen a surge, leaving limited room for further decline in yields. 

 

Market participants now await Tuesday's auction of state government securities, they said. Dealers expect the cut-off yield at the auction to be largely in line with that last week, although the spread between state bonds and government securities will depend on where 10-year benchmark gilt yields close Monday, dealers said.

 

"The (state bond) auction looks in line with last week for now, but the spread will depend on today's (Monday's) closing levels in government securities," a dealer at a state-owned bank said.

 

Dealers said demand at the auction is expected from both long- and short-tenure investors. Long-duration securities are likely to attract investment demand, while banks are expected to remain active buyers at the shorter end of the curve, they said. 

 

The total volume in the government securities market at 1509 IST was INR 551.75 billion, against INR 394.70 billion at 1535 IST Friday, 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 6.65-6.70% range during the day, they said.  (Shumaila Firoz) 

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India Gilts: Up more; profit sales at 6.68-yr benchmark yld limit gains 

 

	1340 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.82	101.86	101.64	101.64	101.62
YTM (%)	6.683	6.6771	6.708	6.708	6.7108

 

India Gilts: Up more; profit sales at 6.68-yr benchmark yld limit gains

 

MUMBAI--1340 IST--Prices of government bonds rose further on Monday due to positive market sentiment, dealers said. Hopes of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index and lower US Treasury yields and crude oil prices intraday pulled down the yield on the 10-year benchmark 6.94%, 2036 gilt to the lowest level since Mar. 13, they said. 

 

The yield on the 10-year benchmark gilt fell to an intraday low of 6.6771% Monday, the lowest since Mar. 13, after breaking the key level of 6.70?rlier in the session. Market participants see the 6.65% level as the next key technical level, with profit booking at 6.68% preventing a further fall in yields. The 10-year benchmark bond will have recovered from the price fall seen during the West Asia war at a yield of 6.66%. "Traders are bullish because global fundamentals are positive and hopes of Bloomberg index inclusion... it is a good level for profit-taking but it (profit-booking) is slow," a dealer at a small-finance bank said. 

 

The yield on the 10-year benchmark rebounded to above 6.68?ter touching am intraday low as some traders booked profits, dealers said. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.65-6.70% range during the day, they said.  

 

If Indian bonds are not included in Bloomberg's Global Aggregate Index, market participants expect the yield on the 10-year benchmark bond to rise by 7-10 basis points to 6.80%, the level at which public sector banks are expected to buy. However, if the inclusion happens as highly expected by the market, dealers expect the yield to fall by 4-5 bps to 6.60%.  

 

The total volume in the government securities market at 1340 IST was INR 448.90 billion, against INR 224.55 billion at 1330 IST Friday, data from Clearing Corp. of India Ltd. showed.

 

On the macroeconomic front, market participants do not expect the Reserve Bank of India's Monetary Policy Committee to hike the repo rate in 2026 due to softening global crude oil prices and foreign inflows through measures taken by the RBI and government last month. (J. Navya Sruthi)  

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India Gilts: Remain up as US yields fall, India fiscal risks seen receding

 

	1228 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.7675	101.80	101.64	101.64	101.62
YTM (%)	6.6903	6.6865	6.708	6.708	6.7108

 

MUMBAI—1228 IST--Prices of government bonds remained up on Monday due to a fall in US Treasury yields and reducing concerns over India's fiscal outlook, dealers said. Traders also remain hopeful of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index. The short covering and fresh purchases early in the week pulled the yield on the 6.94%, 2036 gilt to 6.69%, the lowest for a 10-year benchmark gilt since Mar. 16.

 

Crude oil prices have fallen back to pre-conflict levels after geopolitical tensions in West Asia over the past weeks eased. During the conflict, there were expectation of higher fiscal deficit on higher government spending on fuel-related subsidies and imports with crude oil prices expected to be around $95-$99 per barrel. However, India's crude oil basket has persisted below $70 a barrel over the past week, down from $100 a barrel a month ago and $137 per barrel in early April. 

 

"The market has turned softer as crude has come down sharply and the UST (US Treasury yields) has also weakened," a dealer at a public-sector bank said. "With oil back near pre-war levels, concerns over a higher fiscal deficit have eased, which is positive for bonds." The government has pegged its fiscal deficit at 4.3% of GDP in the Union Budget for 2026-27 (Apr-Mar), lower than 4.4% of GDP in FY26.

 

Traders are also betting on the 10-year yield falling to around 6.65% if Bloomberg announced India's inclusion on its marquee bond index, with the decision expected around mid-July. Most traders say the index provider is likely to give a favourable decision for India after easing compliance for foreign portfolio investors over the past months and the government's decision in June to exempt withholding and capital gains tax on government securities.

 

Market participants were also awaiting India's June consumer price inflation data, due on Jul. 13. Dealers expect inflation to come in on the higher side but believe the rise will be temporary and is unlikely to significantly affect bond prices. "Inflation may print slightly higher, but the market is treating it as a temporary increase. The overall sentiment for bonds remains positive, so the data is unlikely to trigger a major reaction," the dealer quoted above said.

 

The total volume in the government securities market at 1228 IST was INR 332.10 billion, against INR 203.40 billion at 1230 IST Friday, 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 6.69-6.75% range during the day, dealers said.  (Shumaila Firoz) 

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India Gilts: Up on fall in US yields, hopes of inclusion in Bloomberg index

 

	0943 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.76	101.76	101.64	101.64	101.62
YTM (%)	6.6917	6.6913	6.7080	6.7080	6.7108

 

MUMBAI--0943 IST--Prices of government bonds rose, tracking an overnight fall in 10-year benchmark US Treasury yields, dealers said. Traders also remain hopeful of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index, which also supported bond prices, dealers said.   

 

At 0930 IST, the benchmark 10-year US Treasury yield was 4.47%, down from 4.50% at 1700 IST Thursday, which supported bond prices, dealers said. The US Treasury yields were lower after the monthly US jobs report for June, released after Indian market hours on Thursday, showed job gains were lower than expected. US markets were closed on Friday.

 

"Positive sentiment (due to hopes of Indian bond inclusion in Bloomberg's Global Aggregate Index) is continuing from Friday," a dealer at a primary dealership said. "Yield on the 10-year benchmark bond could briefly fall below 6.70% today (Monday)." 

 

Traders remained 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 0.7% weight was under consideration. Such an inclusion is largely expected in the second week of July, dealers said. 

 

Private sector banks likely bought bonds in the secondary market, continuing their buying momentum from the previous trading session, dealers said. These banks net bought INR 16.70 billion on Friday, according to data from Clearing Corp. of India Ltd. State-owned banks are likely to book profits on their holdings if the yield on the 10-year benchmark bond falls below the psychologically crucial level of 6.70%, dealers said. 

 

Dealers said easing worries over a weak monsoon also helped lift market sentiment. At the same time, traders are expected to stay cautious ahead of India's June inflation print, dealers said. The data is anticipated to come in on the higher side, driven by a rise in energy prices, according to one dealer. CPI inflation for June will be released on Jul. 13.  

 

The total volume in the government securities market at 0943 IST was INR 122.45 billion, against INR 35.25 billion at 0930 IST Friday, 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 6.69-6.75% range during the day, dealers said. (Janwee Prajapati)

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India Gilts: Seen opening tad lower on higher crude oil prices; steady later

 

MUMBAI – Prices of government bonds are seen opening slightly lower due to a rise in Brent crude oil prices, dealers said.  However, bond prices are likely to remain steady throughout the day due to a lack of domestic triggers, dealers said. Overall market sentiment is likely to be positive amid hopes of India's inclusion in Bloomberg's Global Aggregate index, dealers said.    

 

The 10-year benchmark 6.94%, 2036 is seen opening near 6.72% and is expected to move in a 6.71-6.75% range during the day. The bond had ended at INR 101.62 Friday, up from INR 101.57 Thursday. At the end of the previous session, its yield settled at 6.7108%, as against 6.7180% Thursday. Traders do not expect the bond yield to fall below the psychologically crucial level of 6.70% until there is clarity on the inclusion of Indian bonds in Bloomberg's flagship index, dealers said. Some traders expect the 10-year benchmark bond yields to remain in the 6.70-6.78% range in the September quarter, dealers said.   

 

Trade volume is likely to remain subdued due to the absence of any firm global or domestic cues, dealers said. Some traders were also on leave due to heavy rain, which is also likely to impact trading volumes, they said. 

 

At 0736 IST, Brent crude oil futures for September delivery were at $72.34 per barrel, up from $71.78 per barrel at the close of Indian gilt market hours Friday. At 0800 IST, the benchmark 10-year US Treasury yield was 4.47%, down from 4.50% at 1700 IST Thursday, which will likely support bond prices, dealers said. On the global front, traders will track crude oil prices and any developments in the US-Iran peace talks for cues, they said. 

 

US and Iranian officials are expected to hold the next round of technical talks in Islamabad. According to media reports, the resumption of negotiations reflects ongoing efforts to maintain diplomatic momentum and address long-standing disputes between the two countries, with Iran's nuclear programme likely to be the main focus. The technical discussions are tentatively scheduled for July 11, though the venue has not yet been finalised.

 

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 0.7% weight was under consideration.

 

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

 

End

 

US$1 = INR 95.3950

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

 

Edited by Avishek Dutta

 

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