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Informist, Wednesday, Jul. 8, 2026

MUMBAI – Calculation of purchases and sales of government bonds by institutions as derived from Clearing Corp. of India Ltd. data is as follows:

* = Calculated according to percentage buy/sell. Minus (-) sign indicates net sell.

@ = For central government securities, including special bonds.

# = Others include insurance companies, provident funds, and the Reserve Bank of India.

Note: The daily net buy/sell amount is calculated by multiplying the total secondary market volume of government bonds by the net buy/sell percentage for each category. (Shaheed Shaikh and Diksha Tripathy)

India Gilts Review: Slump as Trump reignites W Asia war fears, oil prices up

MUMBAI – Prices of government bonds slumped across tenures Wednesday, joining a sell-off in global financial markets after US President Donald Trump said the memorandum of understanding with Iran for a ceasefire was over. Near-month Brent crude oil futures and US Treasury yields rose, also pushing up overnight indexed swap rates, dealers said. Traders are uncertain of the trajectory of bond prices going ahead, though bets of the 10-year benchmark yield falling to 6.65% or lower have largely been erased, they said.

Fears of the West Asia war continuing and subsequently leading to the closure of the vital Strait of Hormuz led to traders selling positions, with some hitting stop-losses after the 10-year benchmark yield rose to 6.75% for the first time in a week, dealers said. The 10-year benchmark 6.94%, 2036 bond ended at INR 101.24, down from INR 101.73 Tuesday. The yield on the bond rose to 6.7636% from 6.6958% at the end of the previous session. The 10-year gilt yield rose nearly 7 basis points Wednesday, the steepest single-day jump since Apr. 2.

"We're waiting to see if anything happens overnight (in the Gulf) before taking a view on where (gilt) prices are going," a dealer at a state-owned bank said. "Foreign banks had the most positions, so probably some selling from them today (Wednesday)."

Along with foreign banks, mutual funds were also likely to have sold gilts, even before Trump's comments, due to redemption pressure, dealers said. Mutual funds have net sold gilts totalling INR 29.49 billion in the past two sessions, some of which was with the view that bond prices have little scope for further rise, dealers said. Traders have been on the watch for the past few sessions to ascertain whether foreign portfolio investors have sold gilts after a sharp rise in bond prices since last month. Fears of sales by FPIs grew Wednesday but FPIs were largely purchasing gilts during the day, dealers said. Some dealers received quotes from FPIs for purchases, they said. As of 1800 IST, FPIs net purchased gilts worth INR 3.13 billion through the Fully Accessible Route Wednesday, as per data from Clearing Corp. of India. 

However, several traders have not yet increased bets of a rate hike this calendar year after Trump's fresh comments as they will watch out for any escalation in the conflict and Brent crude oil prices before taking fresh bets, they said. The one-year OIS rate is pricing in around three rate hikes of 25 basis points each within 12 months, dealers said. 

"Our rate view hasn't changed, we're still bullish on bonds," a senior treasury official at a state-owned bank said. "Liquidity is likely to come into the system because of the ECB (external commercial borrowing) and FCNR (foreign currency non-resident bank deposits)."

At the INR-240-billion Treasury bill auction, the cut-off yield on the 91-day T-bill was slightly higher than expectations since mutual funds faced a cash crunch, dealers said. The RBI set a cut-off yield of 5.30% on the paper, higher than an Informist poll estimate of 5.26%. The cut-off on the 182-day T-bill was broadly in line with expectations at 5.49%. The cut-off yield on the 364-day paper surprised traders, at 5.66%, a tad lower than a poll estimate of 5.68%. The RBI accepted only eight bids for the 364-day bill, and dealers speculated that foreign banks got stock of the paper. The total turnover in the gilt market Wednesday was INR 936.70 billion, sharply higher than INR 686.45 billion Tuesday.

OUTLOOK

On Thursday, bond prices will track the overnight movement in US Treasury yields after the release of minutes of the US Federal Open Market Committee's June meeting late on Wednesday. Traders are anxious to see whether US Federal Reserve Chair Kevin Warsh's commentary will be as restrictive as it was at the meeting outcome last month. Traders will also watch for developments in the US-Iran war in the Gulf and its impact on Brent crude oil prices after the fresh escalation Wednesday, dealers said. Focus will also remain on foreign inflows – both in government bonds and via the various measures the RBI had announced last month to shore up capital – and any news regarding the inclusion of Indian bonds in Bloomberg's 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. However, prior to Wednesday, traders had bets of the 10-year benchmark yield falling to 6.65% or below, but they now expect a broad range of 6.68% to 6.85%. On the upside, traders may step in to buy gilts at the 6.78% yield, they said. 

Traders are also likely to remain cautious ahead of the release of India's June inflation data on Monday, dealers said. The print is expected to be on the higher side, reflecting the rise in energy prices, they said. Deficient southwest monsoon rainfall will also contribute to higher inflation, they said.  (Cassandra Carvalho)

India Gilts: Remain sharply dn as Trump's ceasefire remark lifts oil, US ylds

MUMBAI-1620 IST–-Prices of government bonds remained sharply lower, tracking an intraday rise in prices of Brent crude oil and US Treasury yields after US President Donald Trump said the US' ceasefire with Iran was over, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond, rose above the key 6.75% level, which triggered stop-losses, pulling down bond prices, they said. 

Traders maintained caution amid greater volatility in the market due to uncertainty about the resumption of the US-Iran war, they said. "The market reacted to Trump's statement immediately," a dealer at state-owned bank said. "We should get more clarity by tomorrow (Thursday) on how the market behaves."

Traders expect 6.80% to be the next crucial level for the yield on the 10-year benchmark bond, dealers said. "The (6.94%, 2036) bond may find some breather around the 6.80-6.82% yield level if the current selling pressure continues." 

Global factors continued to weigh on bond prices, dealers said. Brent crude oil futures for September delivery rose to above $78 per barrel at 1630 IST, up from $76.06 per barrel at 0900 IST, and significantly higher than $72.59 per barrel at the end of Indian gilt trading hours Tuesday. Meanwhile, the yield on the 10-year US Treasury note was at 4.59%, up from 4.56% at 0900 IST.  

The fall in bond prices was limited due to purchases by state-owned banks and foreign portfolio investors near 6.75% yield on the 10-year benchmark bond, dealers said. "At these levels (6.75-6.76% yield on 6.94%, 2036 gilt), only PSUs (public sector banks) have the capacity and capability to enter the market," a dealer at a private sector bank said.   

Prices did not react much to Wednesday's Treasury-bill auction result, where cut-off yields came in slightly higher than the market view, dealers said. "Liquidity may not be as comfortable as expected, CP (commercial paper) and CD (certificates of deposit) and markets have not cooled off, which may have pushed cut-off yields higher" the dealer from state-owned bank quoted above said. 

The government sold 91-day, 182-day and 364-day T-bills totalling INR 240 billion Wednesday. The RBI set a cut-off yield of 5.30% on the 91-day T-bill, 5.49% on the 182-day bill, and 5.66% on the 364-day paper, as against Informist poll estimates of 5.26%, 5.48%, and 5.68% for the three bills, respectively.

The total volume in the government securities market at 1620 IST was INR 891.65 billion, against INR 622.75 billion at 1630 IST Tuesday, 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 6.68-6.75% range during the day, dealers said. The yield on the benchmark 10-year 6.94%, 2036 bond is expected close to 6.78%, dealers said.  (Shumaila Firoz and Diksha Tripathy) 

India Gilts: Plunge; 10-yr yld rises most in 7 wks as Trump says Iran MoU over

--Dealers: Gilts tumble after US Trump says ceasefire with Iran is "over" 

--India's 10-yr benchmark gilt yld up over 6 bps, most in a day since May 18 

--Dealers:Gilts dn more; 10-yr yield's rise above 6.75% triggers stop losses 

--Dealers:Rise in 5-yr OIS post Trump remarks triggers stop-losses near 6.20% 

MUMBAI--1501 IST—Prices of government bonds slumped across tenures, tracking a rise in Brent crude oil prices and global bond yields after US President Donald Trump said that the memorandum of understanding between the US and Iran on a ceasefire was over, dealers said. The yield on the benchmark 10-year gilt rose about 7 basis points Wednesday, the most in a day since May 18. Some traders hit stop-losses in gilts after the 10-year 6.94%, 2036 gilt yield rose to the key 6.75% level for the first time in a week. A rise in overnight indexed swap rates also weighed, as traders also hit stop-losses in the five-year swap rate, dealers said. 

Trump said negotiations for a peace deal with Iran were a waste of time, and that the ceasefire agreement was "over". Following his comments, near-month Brent crude oil futures rose to about $78 per barrel from $76 a barrel at 0900 IST. The yield on the 10-year US Treasury note rose to 4.59%, the highest since May 21. Foreign banks and some offshore participants were selling gilts and paying fixed rate contracts in swaps, dealers said. However, likely purchases by state-owned banks at around 6.76% yield on the 10-year benchmark gilt limited further fall in prices, they said.

"Market didn't think 74 (6.74%) would break. 6.75% and 6.74% (yield on the 10-year benchmark bond) were levels where stop-losses were hit," a dealer at a private sector bank said. 

The total volume in the government securities market at 1501 IST was INR 725.75 billion, much higher than INR 593.75 billion at 1530 IST Tuesday, 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 6.72-6.79% range during the day, dealers said. (Cassandra Carvalho and J. Navya Sruthi) 

India Gilts: Remain down on rise in crude oil price, renewed W Asia conflict

MUMBAI-–1145 IST--Prices of government bonds were down following an intraday rise in prices of Brent crude oil and as renewed tensions in the US-Iran war amid a fragile ceasefire continued to weigh on market sentiment, dealers said. Traders expect yields to remain elevated unless there is any positive news on the inclusion of Indian bonds in Bloomberg's Global Aggregate Index, they added. 

"From yesterday's (Tuesday) close, the 10-year benchmark, 6.94, 2036% bond yield has hardened by around 3 basis points. We expect the yield to move towards 6.75% in the upcoming session because of the geopolitical tensions, unless there is any news on Bloomberg bond inclusion," a dealer at a public sector bank said.

Higher oil prices are seen as negative for domestic bonds as they could add to inflationary pressures, dealers said. Brent crude oil futures for September delivery rose to near $77 per barrel, slightly up from $76 per barrel in early trade, and against $72.59 per barrel at the end of Indian trading hours Tuesday.

At the Treasury bill auction Wednesday, dealers expect the cut-off yields on the 91-day and 182-day papers to remain broadly in line with the previous auction. However, the cut-off yield on the 364-day T-bill could be slightly higher as market participants expect interest rates to rise given fresh escalations in West Asia, they said. Some traders expect the cut-off on the 364-day T-bill to price–in expectations of a rate hike later in the current financial year, dealers said.

Mutual Funds were keen to pick up 91-day T-bills, while banks are likely to bid for 182-day and 364-day T-bills, dealers said. "We are not expecting any FPI (Foreign Portfolio Investment) demand in T-bills for now," the dealer quoted above said.

The Reserve Bank of India is likely to set a cut-off of 5.26% yield on the 91-day Treasury bill at the auction Wednesday, according to an Informist poll. The cut-off on the 182-day T-bill is seen at 5.48%, and that on the 364-day T-bill is seen at 5.68% yield.

The total volume in the government securities market at 1145 IST was INR 250.15 billion, almost similar to INR 281.80 billion at 1130 IST Tuesday, 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 6.68-6.75% range during the day, dealers said.  (Shumaila Firoz) 

India Gilts: Sharply down on rise in Brent crude over $76/bbl; US yields up

MUMBAI--0950 IST--Prices of government bonds fell sharply as Brent crude oil prices rose above $76 per barrel and US yields firmed up overnight, dealers said. Traders also remained cautious ahead of the US Fed's June meeting minutes. The fall in bond prices was limited, likely due to purchases from foreign participants amid hopes of Indian bonds' inclusion in Bloomberg's Global Aggregate Index, dealers said.

"Bond prices were down due to the news about the US revoking Iran's licence...crude is also up," a dealer at a state-owned bank said. "We will track Fed minutes also, it is a trigger now." The US reinstated sanctions on Iranian oil on Tuesday. A US official called Iran's attacks on vessels in the Strait of Hormuz "wholly unacceptable" and said they would trigger consequences. Last month, the US Treasury had permitted Iranian oil sales through Aug. 21 as part of a fragile deal between Tehran and Washington. Tuesday's move ends that grace period early, with the new end date of Jul. 17.

Brent crude futures for September delivery rose to over $76 per barrel as against $72.59 per barrel at the end of Indian trading hours Tuesday. Oil prices rose Tuesday as the US launched strikes on Iran following attacks on three commercial vessels in the Strait of Hormuz. The strikes deepen a confrontation that has stalled peace efforts. Iranian media cited multiple blasts around the strait, including in Qeshm, Sirik and Bandar Abbas. Tehran accused Washington of violating the ceasefire and has threatened to respond.

The yield on the 10-year benchmark US treasury note rose to 4.56% early Wednesday, up almost 6 basis points from the end of Indian trading hours Tuesday. The yield on US Treasury securities likely rose as fresh escalations in West Asia kept pressure on energy prices and threatened an already fragile US-Iran ceasefire. Traders also await the movement of US Treasury yields after the release of the minutes of the US Federal Open Market Committee's June meeting, due Wednesday.

At the Treasury bill auction Wednesday, the government will sell INR 90 billion through the 91-day T-bill, INR 80 billion through the 182-day T-bill, and INR 70 billion through the 364-day T-bill. Traders largely expect the cut-off yields to be similar to the auction last week given comfortable liquidity in the banking system, dealers said. However, some traders expect the recent escalation in the West Asian war to weigh on the cut-off yields, dealers said.  

Fall in bond prices was limited due to likely foreign purchases. Foreign investors are expected to maintain their buying this week, with foreign banks' purchases totalling INR 48.8 billion so far. However, dealers noted bond prices are unlikely to see a sharp rise unless the daily average buying by foreign participants picks up from current levels.

The total volume in the government securities market at 0950 IST was INR 104.40 billion, against INR 86.70 billion at 0930 IST Monday, 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 6.68-6.75% range during the day, dealers said. (Janwee Prajapati)

India Gilts: Seen lower due to rise in Brent crude oil prices, US yields

MUMBAI – Prices of Indian government bonds are seen opening lower tracking the overnight rise in Brent crude oil prices and US Treasury yields, dealers said. Traders remain cautious ahead of the release of the minutes of the US Federal Open Market Committee's June meeting. However, the domestic focus will largely be on foreign inflows and any news regarding the inclusion of Indian bonds in Bloomberg's Global Aggregate Index, dealers said. Hopes of this inclusion will likely limit losses, dealers said.

The 10-year benchmark 6.94%, 2036 is seen opening near 6.72% Wednesday and is expected to move in a 6.68-6.75% range during the day. The bond had ended at INR 101.73 Tuesday, down from INR 101.81 Monday. The closing yield Tuesday was 6.6958%, slightly up from 6.6851% Monday. The yield on the 10-year benchmark bond slipped below the key 6.68% mark Tuesday. However, the decline didn't hold as traders and public sector banks booked profits on their holdings, dealers said. Traders had been eyeing a fall in yield to 6.60% if yields stayed under 6.68%, dealers said. With geopolitical tensions flaring again, the focus has now shifted to a potential rise in bond yields to 6.75%, they added.

Wednesday, the fall in bond prices is likely to be limited on hopes that Indian sovereign bonds will be included in Bloomberg's Global Aggregate Index and due to strong foreign inflows. Foreign investors are expected to maintain their buying this week, with purchases totalling INR 48.8 billion so far. However, dealers noted bond prices are unlikely to see a sharp rise unless the daily average buying by foreign participants picks up from current levels.

The yield on the 10-year benchmark US treasury note rose to 4.56% early Wednesday, up almost 6 basis points from the end of Indian trading hours Tuesday. The yield on US Treasury securities likely rose as fresh escalations in West Asia kept pressure on energy prices and threatened an already fragile US-Iran ceasefire. Traders also await the movement of US Treasury yields after the release of the minutes of the US Federal Open Market Committee's June meeting, due Wednesday.

Brent crude futures for September delivery rose to nearly $76 per barrel as against $72.59 per barrel at the end of Indian trading hours Tuesday. Brent crude oil prices rose after US carried out strikes on Iran Tuesday, following attacks on three commercial vessels in the Strait of Hormuz, the US military said. The strikes mark a sharp escalation in a confrontation that has already disrupted efforts to end the war. Iranian state media reported multiple explosions around the Strait — six on Qeshm Island, seven in Sirik, and additional blasts in the major port of Bandar Abbas. Iran's foreign ministry accused the US of repeated violations of the US-Iran ceasefire agreement and warned of retaliation.

Back home, traders had shifted their focus away from crude oil prices as they had expected these to trade in the $70–$75 per barrel range. However, the recent escalation in West Asia is likely to draw attention back to energy prices and also increased fears of higher inflation, dealers said. Traders are likely to remain cautious ahead of the release of India's June inflation data Monday, dealers said. Inflation is expected to be on the higher side, reflecting the rise in energy prices, they said. A deficient south-west monsoon rainfall will also contribute to higher inflation, they said.  (Janwee Prajapati)  End

US$1 = INR 95.5550

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

Filed by Kabir Sharma

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