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Informist, Wednesday, Jul. 15, 2026

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds ended higher Wednesday as Brent crude oil prices eased, and foreign portfolio investors likely bought gilts, dealers said. Bets of the inclusion of Indian sovereign bonds in Bloomberg's flagship Global Aggregate Index also aided the rise in prices, dealers said. However, bond prices were little changed during most of the session due to caution among traders about the trajectory of oil prices as the West Asia war continued, and whether Indian bonds would be included in the flagship Bloomberg index. 

 

The 10-year benchmark bond ended at INR 101.17, up from INR 101.02 Tuesday. The yield on the bond fell to 6.7738% from 6.7945% at the end of the previous session. 

 

"Foreign banks must be buying today (Wednesday), whoever had shorted (short-sold gilts) yesterday must be covering," a dealer at a state-owned bank said. "Globally, yields are hardening, but because of the Bloomberg expectation, market is holding. If (10-year) US yield goes to 4.65%, then we'll see a major shift in our market."

 

As of 1800 IST, foreign portfolio investors net purchased gilts worth INR 4.93 billion through the Fully Accessible Route Wednesday, according to data from Clearing Corp. of India. The yield on the 10-year benchmark US Treasury note was 4.61% at 1700 IST, higher than 4.60% at 0900 IST, and against 4.62% at 1700 IST Tuesday. Traders are cautious of further rise in US Treasury yields after commentary by US Federal Reserve officials Kevin Warsh and Christopher Waller indicated a tendency towards rate hikes in the world's largest economy even as CPI inflation data for June was lower than expected. A rise in US yields narrows the interest rate differential between safe-haven assets and emerging market debt, making the latter less appealing to foreign investors. Foreign portfolio investors could start selling gilts if US yields rise further, dealers said. 

 

Several traders expect Bloomberg to publish its review on Indian gilts this week and if the inclusion happens, the yield on the 10-year benchmark 6.94%, 2036 government bond could fall as much as 10 basis points instantly, dealers said. Some traders expect the review in August or September. Some traders expect scope for the 10-year benchmark bond yield to hit 6.68% at least once before rising again, dealers said. Save for the possible Bloomberg inclusion, the bond market lacks any other positive triggers for yields to fall, unless oil prices tumble, dealers said. Bond yields are seen rising, tracking the rise in global bond yields if the Bloomberg inclusion does not happen, they said. 

 

"There is this fatigue in yields, especially at 6.70% or below, so people were starting to book profits, and then they got the reason for the 10-bps move once oil prices rose," a dealer at a mutual fund said.    

 

The yield spread between the 10-year benchmark gilt and the 15-year benchmark 6.68%, 2040 bond compressed to 22 basis points Wednesday, after hitting 21 bps earlier this month — which was the lowest since Jun. 5, 2025. Some traders expect this spread to compress further by about 2-3 bps, while others expect the spread to widen once again.

 

The total turnover in the government securities market was INR 590 billion Wednesday, down from INR 708.10 billion Tuesday, data from Clearing Corp. of India showed.

 

OUTLOOK

On Thursday, traders will continue to maintain caution on developments in West Asia and their impact on Brent crude oil prices, along with the movement of US Treasury yields closer to the US Federal Open Market Committee's July meeting. Domestic focus will continue to be on news regarding the inclusion of Indian gilts in Bloomberg's flagship index and foreign capital inflows following measures announced by the RBI last month.

 

The depreciation of the rupee against the dollar is a concern for some traders, as the fall comes despite the RBI deploying various measures to prevent it. Traders will also track the progress of monsoon rainfall, as deficient southwest monsoon rainfall will contribute to higher inflation, they said. However, domestically, inflation is largely in check currently, dealers said, barring the imported inflation from a rise in oil prices. Traders now look to gauge whether the RBI's Monetary Policy Committee will raise the repo rate in October to curb inflation and stabilise the depreciating rupee. 

 

The 10-year 2036 bond is seen moving between 6.75% and 6.90%, dealers said.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.1650	6.7738%	101.0175	6.7945%
6.48%, 2035	98.0000	6.7732%	97.7700	6.8075%
6.36%, 2031	99.6125	6.4572%	99.5150	6.4821%
6.68%, 2040	97.2400	6.9923%	97.0800	7.0108%
6.90%, 2065	92.3600	7.5073%	92.2000	7.5210%

 

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India Gilts: Give up some gains on intraday rise in Brent crude oil prices

 

	1334 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.12	101.25	101.08	101.08	101.02
YTM (%)	6.7808	6.7619	6.7857	6.7857	6.7945

 

MUMBAI--1334 IST--Government bonds gave up some gains due to an intraday rise in Brent crude oil prices, dealers said. Bond prices remained higher as there was no escalation in the West Asia conflict, dealers said. Furthermore, a lower-than-expected US CPI inflation print buoyed market sentiment, dealers said. Hopes of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index also supported bond prices, dealers said.    

 

Brent crude oil futures for September delivery were over $86 per barrel, almost similar to $86.35 per barrel at the end of the Indian trading session Tuesday. Data released after Indian market hours Tuesday showed US CPI inflation for June was much lower than expected, which also supported bond prices, dealers said. US Treasury yields fell as US consumer price index declined 0.4% month-on-month in June, compared with The Wall Street Journal poll estimate of a 0.1?ll. The 12-month CPI inflation rate was 3.5%, against a forecast of 3.8%.

 

Back home, some traders likely covered short bets placed on the 10-year benchmark 6.94%, 2036 bond as lack of any escalation in the West Asia conflict led to expectations of a rise in bond prices, dealers said. Traders' risk appetite increased as they considered the rise in crude oil prices temporary, dealers said. A proxy for tracking short sales in a particular bond is the number of trades on the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 1334 IST showed trades worth INR 46.02 billion in the 6.94%, 2036 gilt, slightly down from INR 49.62 billion Tuesday.

 

"Everybody sold yesterday (Tuesday), so traders were light and there was nothing negative today (Wednesday), so they (traders) found the levels good for buying," a dealer at a small finance bank said. "PSUs (public sector banks) are definitely not buying, but there must be some foreign flows." Public sector banks bought INR 93.74 billion of gilts in the secondary market Tuesday near 6.80% yield on the 10-year benchmark 6.94%, 2035 bond, due to which traders do not expect any further purchases by these banks on Wednesday at current levels, dealers said. 

 

Bond prices were little moved after the result of the INR-240-billion Treasury bill auction was broadly in line with market expectations, dealers said. However, the cut-off on the 182-day T-bill was 5.57%, higher than the market expectation of 5.53%, according to the median of an Informist poll. The Reserve Bank of India set a cut-off yield of 5.33% and 5.72% on the 182-day T-bill and 364-day T-bill, respectively, which were in line with market expectations.  

 

Cut-off yields were up 4 basis points, 8 bps and 6 bps higher than the cut-off yields set at last week's Treasury bill auction for the 91-day, 182-day and 364-day T-bill, respectively. The cut-off yields rose due to recent escalation in the West Asia war, which weighed on market sentiment, dealers said. 

 

At 1334 IST, the total trade volume in the government securities market was INR 354.40 billion, lower than INR 456.95 billion at 1330 IST Tuesday, data from Clearing Corp. of India Ltd. showed. Traders expect the yield on the 10-year benchmark 6.94%, 2036 bond, to trade at 6.74-6.80% Wednesday.  (Janwee Prajapati) 

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India Gilts: Sharply up as risk appetite improves; intraday fall in oil helps

 

	1200 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.18	101.25	101.08	101.08	101.02
YTM (%)	6.7713	6.7619	6.7857	6.7857	6.7945

 

NEW DELHI--1200 IST--Government bond prices remained sharply higher as Brent crude futures eased intraday, and an overnight fall in US Treasury yields helped, dealers said. Traders' risk appetite increased as there was no further military escalation in the West Asia conflict overnight and they considered levels lucrative to pick up gilts after a sharp fall in prices Tuesday.

 

The 10-year benchmark 6.94%, 2036 gilt had fallen 45 paise Tuesday, with its yield topping 6.80% for the first time in three weeks. Brent crude for September delivery hovered near $85 per barrel, down from $86 per barrel at 0900 IST and $88 a barrel the previous day, prompting traders to pick up gilts in the hope that the recent flare-up between the US and Iran was temporary, dealers said.

 

At the same time, Brent futures rose nearly 20% over the last week and raised concerns about a repo rate hike in October, so the upside in bond prices was limited, dealers said. They do not expect the 10-year benchmark gilt yield to fall below 6.70?sily without a decisive end to the West Asia conflict. This kept trade volumes lower on Wednesday than the previous day as the purchases were not widespread and lacked conviction, dealers said.

 

"It is more like a relief rally. Traders are taking the opportunity to stock up after selling quite a lot yesterday (Tuesday)," a dealer at a private-sector bank said. "Macros (crude prices and US yields) are also in a better state today (Wednesday) but it's difficult to say if a rally will sustain, even breaking 6.75% (yield on the 6.94%, 2036 bond) will be difficult."

 

While traders also universally expect that Bloomberg Index Services will announce the inclusion of India's fully accessible route bonds to its flagship Global Aggregate Index, foreign portfolio investors have been only marginal buyers in the last few sessions, dealers said. Clearing Corp. of India data showed net sales of index-eligible bonds by FPIs on Monday for the first time since Jun. 3. Several were left waiting for the announcement after expecting the decision to have come through either by end-June or mid-July, in line with the index provider's statement an update would be provided "mid-2026".

 

While traders were unsure of purchases linked to the index inclusion in the near term, FPIs may be buying gilts in the secondary market Wednesday, dealers said. The 10-year US Treasury yield fell to 4.59% from as high as 4.64% Tuesday as data released after Indian market hours Tuesday showed CPI inflation for June was much lower than expected in the world's largest economy. Comments from US Federal Reserve Chair Kevin Warsh on Tuesday were in line with expectations and did not ramp up fears of immediate rate increases, dealers said. The view on US rate hikes has gained importance in recent weeks as traders see it putting pressure on the Reserve Bank of India's Monetary Policy Committee to also hike the policy repo rate and preserve an interest rate differential, dealers said.

 

The total trade volume in the government securities market was INR 246.70 billion, lower than INR 362.75 billion at 1230 IST Tuesday, data from Clearing Corp. of India Ltd. showed. Traders expect the yield on the 10-year benchmark 6.94%, 2036 bond, to trade at 6.74-6.80% Wednesday.  (Aaryan Khanna) 

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India Gilts: Up on lack of escalation in W Asia, fall in crude oil, US yld

 

	0940 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.19	101.22	101.08	101.08	101.02
YTM (%)	6.7710	6.7668	6.7857	6.7857	6.7945

 

MUMBAI--0940 IST--Government bond prices were up due to lack of escalation in West Asia and an overnight fall in US Treasury yields, dealers said. Slight fall in Brent crude oil prices also supported bond prices, dealers said. Traders likely purchased bonds as they considered the levels lucrative after a sharp fall in bond prices Tuesday, dealers said. Hopes of Indian bond inclusion in Bloomberg's Global Aggregate index also supported bond prices, dealers said.

 

Brent crude oil futures for September delivery were at $85.67 per barrel, down from $86.12 per barrel at the end of the Indian trading session Tuesday. At 0940 IST, the yield on the 10-year benchmark US Treasury note was at 4.60%, down from 4.62% at 1700 IST Tuesday. US Treasury yields fell as US CPI inflation declined 0.4% month-on-month in June, compared with the Wall Street Journal poll estimate of a 0.1?ll. The 12-month CPI inflation rate was 3.5%, against a forecast of 3.8%.

 

"The market is positive because there is no escalation in the US-Iran (conflict)," a dealer at a private sector bank said. "... Some traders could be there because prices have fallen. I think there must be some FPI flows also, because volumes are good in early trade." 

 

At the INR-240-billion Treasury bill auction, traders expect the cut yield to be slightly higher than the cut-off set on Treasury bills at last week's auction, dealers said. Some traders expect the cut-off yield on the 182-day T-bill and 364-day T-bill to be 1-2 basis points higher than the cut-off set last week. The Reserve Bank of India set a cut-off of 5.49% and 5.66% cut-off yield on the 182-day and 364-dya T-bills, respectively, at last week's auction.  

 

Traders remained hopeful of the inclusion of Indian sovereign bonds in Bloomberg's flagship Global Aggregate Index. Optimism of the inclusion of Indian sovereign bonds in Bloomberg's flagship Global Aggregate Index limited the rise in yields, dealers said, with some expecting the announcement this week. Several traders have pushed back the likely announcement to August or September. If such an inclusion happens, the yield on the 6.94%, 2036 bond is likely to fall to 6.65%, dealers said. 

 

The total trade volume in the government securities market at 0940 IST was INR 114.10 billion, higher than INR 115.75 billion at 0930 IST Tuesday, data from Clearing Corp. of India Ltd. showed. Traders expect the yield on the 10-year benchmark 6.94%, 2036 bond, to trade at 6.75-6.80% Wednesday. (Janwee Prajapati)

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India Gilts: Seen tad up on lack of escalation in W Asia, fall in US yields

 

MUMBAI – Government bond prices are likely to open marginally higher on Wednesday, tracking a slight overnight fall in Brent crude oil prices and US Treasury yields, dealers said. Lack of fresh escalation in the war in West Asia is likely to help bond prices, dealers said. However, with no major domestic cues lined up, traders are likely to await clarity on the US-Iran conflict before building aggressive positions, as Brent crude oil prices remained above $85 per barrel, a psychologically crucial level, dealers said. Optimism about the potential inclusion of Indian sovereign bonds in Bloomberg's Global Aggregate Index is likely to support bond prices, dealers said. 

 

The 10-year benchmark 6.94%, 2036 is seen opening near 6.78% Wednesday and is expected to move between 6.75% and 6.81% during the day. The yield on the 10-year benchmark bond is likely to face strong resistance at 6.80% Wednesday and is unlikely to sustain above the psychologically crucial level, dealers said. Public sector banks are likely to continue their purchases from the previous trading session as they considered the yield on the 10-year benchmark bond attractive, dealers said. These banks bought gilts worth INR 93.74 billion Tuesday, according to data from the Clearing Corp. of India Ltd. However, any further rise in Brent crude oil prices could push up the yield on the 6.94%, 2036 bond to over 6.80%, dealers said.

 

The 6.94%, 2036 bond had ended at INR 101.02 Tuesday, down from INR 101.47 Monday. The yield on the bond was 6.7945% Tuesday, down from 6.7309% Monday. Bond prices ended lower Tuesday for the second consecutive session, amid a jump in Brent crude oil prices to over $85 per barrel as strikes between the US and Iran intensified in West Asia. Some traders see the current rise in crude oil prices as short-lived, as reflected in strong gilt purchases by state-owned banks on Tuesday. However, others fear Brent crude oil prices might surge to $90 per barrel, which will likely nudge the Reserve Bank of India's Monetary Policy Committee to hike the repo rate in its October meeting. Earlier, traders had pared bets on any policy rate hike in the current calendar year.

 

Brent crude oil futures for September delivery were at $85.97 per barrel, down slightly from 86.12 per barrel at the end of the Indian trading session Tuesday. At 0745 IST, the yield on the 10-year benchmark US Treasury note was at 4.59%, down from 4.62% at 1700 IST Tuesday. US Treasury yields fell as US CPI inflation declined 0.4% month-on-month in June, compared with the Wall Street Journal poll estimate of a 0.1?ll. The 12-month CPI inflation rate was 3.5%, against a forecast of 3.8%.

 

Traders will also track the result of the INR-240-billion Treasury bill auction Wednesday, dealers said. Traders largely expect the cut-off yields to be similar to last week. However, some traders expect the cut-off to be slightly higher, given the recent rise in Brent crude oil prices, dealers said.
 

The domestic focus will remain on updates regarding the inclusion of Indian government bonds in Bloomberg's flagship index. Traders will also track foreign inflows linked to the RBI's measures announced last month to boost capital, dealers said. Several bankers said that inflows from foreign-currency non-resident deposits have so far been weaker than expected.  (Janwee Prajapati)

 

End

 

US$1 = INR 96.2550

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

 

Edited by Avishek Dutta

 

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