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Informist, Friday, Aug. 14, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of most government bonds ended steady Friday. State-owned banks booked profits as the yield on the 10-year 6.94%, 2036 bond approached 6.75%, capping gains in bond prices, dealers said. However, an intraday fall in Brent crude oil prices supported bonds, dealers said. Long-term bonds outperformed other bonds Friday, as has been the case throughout the week, on demand from foreign portfolio investors and foreign banks, dealers said.   

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 101.27, similar to Thursday's level. Its yield settled at 6.7578%, slightly lower than 6.7582% on Thursday. During the day, the 10-year benchmark bond moved between 6.75% and 6.76%. The yield on the 10-year benchmark 2036 bond failed to break the key 6.75% level as state-owned banks booked profits near those levels, dealers said. So far this week, which started Aug. 10, state-owned banks were net sellers of gilts in the secondary market, with total sales of INR 121.98 billion through Thursday, data from the Clearing Corp. of India Ltd showed. 

 

"The 6.75% level (yield on the 10-year 2036 bond) is a crucial one for the market," a dealer at a state-owned bank said. "... If that (6.75% level) breaks, we might see some buying till it hits 6.72%."

 

Total market volume remained low throughout the trading session as traders refrained from placing aggressive bets ahead of the weekend, dealers said. Most traders trimmed positions amid lower risk appetite due to lack of clarity about the peace deal between the US and Iran, which weighed on bond prices, dealers said. The total turnover in the government securities market was INR 458.90 billion, almost half the volume on Thursday, data from CCIL showed. 

 

"Today (Friday), the volume is low because nobody wants to carry positions at the moment because of the (US-Iran) war-related uncertainty, so traders are offloading positions and that is just impacting the prices," a dealer at another state-owned bank said.

 

Friday, an intraday fall in Brent crude oil prices also supported bond prices, dealers said. Brent crude oil futures for October delivery touched the day's low of $86.20 per barrel, lending positive cues to the market, dealers said. Near-month Brent crude oil prices were at $87.20 per barrel at the end of the Indian gilt market hours, slightly lower than $87.36 per barrel at 1700 IST Thursday. 

 

Globally, a fall in US Treasury yields also supported bond prices Friday, dealers said. The yield on the 10-year benchmark US Treasury note was 4.66%, down from 4.68% at 1700 IST Thursday.  

 

Friday, long-term bonds were up on demand from insurers, foreign investors and banks, dealers said. Purchases from foreign banks also helped bond prices Friday, dealers said. Foreign banks have purchased bonds worth INR 157 billion through Thursday, CCIL data showed. 

 

Bond prices reacted very little to the result of the INR-320-billion auction Friday as it was largely in line with expectations, dealers said. At the auction, demand for long-term bonds was robust from both insurance companies and banks, dealers said. The RBI set a coupon of 6.20% on the new 2029 bond, slightly higher than an Informist poll estimate of 6.18%. The RBI set the coupon on the new 2033 bond at 6.57%, matching consensus estimates.

 

The cut-off prices on the long-term bonds were largely in line with expectations, at INR 98.66 on the 7.24%, 2055 bond compared to a poll estimate of INR 98.63. The cut-off price on the 7.50%, 2056 green bond was INR 102.19, against a consensus of INR 102.15. Demand for bond-forward rate agreements on the long-term bonds was negligible, dealers said. Insurance companies purchased the green bond to fulfil mandates to invest in infrastructure funding, while some state-owned and foreign banks purchased the 2055 bond for their trading books, dealers said. 

 

OUTLOOK

Gilts are not traded on Saturdays. Monday, gilt prices may take direction from developments in the war in West Asia and their impact on crude oil prices and US Treasury yields over the weekend, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.72% and 6.80% Monday, dealers said. Any significant movement in the rupee and swap rates will also lend cues, dealers said. 

 

Traders expect data on foreign inflows through RBI's concessional swap schemes by Monday, with traders estimating total inflows to have crossed $50 billion. Inflows through foreign currency non-resident (banks) deposits are seen at about $45 billion as of this week, dealers said. A higher-than-expected total inflow may lend positive cues to the market, dealers said.     

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.2700	6.7578%	101.2675	6.7582%
6.48%, 2035	98.2875	6.7324%	98.1650	6.7506%
6.36%, 2031	100.0150	6.3560%	100.0200	6.3547%
7.06%, 2041	101.1200	6.9378%	101.0200	6.9487%
7.24%, 2055	98.6800	7.3506%	98.6100	7.3565%

 

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India Gilts: Mixed; little changed post auction result, long-term bonds up

 

	1500 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.2675	101.34	101.22	101.33	101.27
YTM (%)	6.7581	6.7479	6.7648	6.75	6.7582

 

MUMBAI--1500 IST--Prices of government bonds were little changed after the result of the INR-320-billion gilt auction was largely within estimates, dealers said. Prices briefly inched lower, tracking an intraday rise in near-month Brent crude oil futures to above $88 per barrel, dealers said. Long-term bonds were up on demand from insurers and some foreign investors and banks, dealers said. State-owned banks continued to book profits Friday, limiting a fall in the yield on the 6.94%, 2036 benchmark bond below 6.75%. These banks have net sold gilts totalling INR 122 billion this week till Thursday, as per data from Clearing Corp. of India. Foreign banks continued to buy gilts, dealers said, with this segment netting purchases worth INR 157 billion in the same period.

 

At the auction, demand for long-term bonds was robust from both insurance companies and banks, dealers said. The RBI set a coupon of 6.20% on the new 2029 bond, slightly higher than an Informist poll estimate of 6.18%. The coupon on the new 2033 bond was set at 6.57%, the same as consensus estimates. The cut-off prices on the long-term bonds were slightly higher than expected, at INR 98.66 on the 7.24%, 2055 bond compared to a poll estimate of INR 98.63. The cut-off price on the 7.50%, 2056 green bond was INR 102.19, against a consensus of INR 102.15. Demand for bond-forward rate agreements on the long-term bonds was negligible, dealers said. Insurance companies purchased the green bond to fulfil mandates to invest in infrastructure funding, dealers said, while some state-owned and foreign banks purchased the 2055 bond for their trading books, dealers said. 

 

Barring the movement of crude oil prices and US Treasury yields, there was a dearth of fresh triggers for the bond market, dealers said. Traders expect data from the Reserve Bank of India by Monday on foreign inflows through its concessional swap schemes as of this week, with traders estimating total inflows to have crossed $50 billion. Inflows through foreign currency non-resident (banks) deposits are seen at about $45 billion as of this week, dealers said. 

 

"Till the weekend, there's nothing (for the bond market to track), then we'll see on Monday. People are not aggressively shorting (short-selling) here, and Brent is also not reacting much," a dealer at a state-owned bank said. Near-month Brent crude oil futures have averaged $85 per barrel so far this month. The total trade volume in the government securities market at 1500 IST was INR 339.55 billion, similar to INR 337.70 billion at 1530 IST Thursday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.72–6.80% during the day. (Cassandra Carvalho)

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India Gilts: Erase gains as crude rises intraday; auction demand seen firm

 

	1242 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.26	101.34	101.24	101.33	101.27
YTM (%)	6.7599	6.7479	6.7620	6.7500	6.7582

 

NEW DELHI--1240 IST--Government bond prices erased early gains as crude oil prices rose intraday and traded in a thin band due to caution before the result of the weekly gilt auction, dealers said. End-investors had appetite for all four bonds at the INR-320-billion auction, though bids were not aggressive across bonds, they said.

 

Brent crude for October delivery rose to $88.00 per barrel from $87.18 a barrel at 0900 IST amid uncertainty around crude oil supply through the Strait of Hormuz. The reaction in gilt prices, which have been sensitive to oil prices, was limited before the auction result and because the 10-year US Treasury yield was still lower than Thursday, dealers said. Some traders also sold the 10-year benchmark 6.94%, 2036 bond when its yield dipped below 6.75% in early trade, and were hopeful they could sell again at those levels if the auction cut-off prices were better than expected, they said.

 

The Reserve Bank of India is expected to set the coupon on the new three-year, 2029 bond at 6.18% and on the new seven-year, 2033 gilt at 6.56%, according to an Informist poll of 18 market participants. Banks were the largest bidders for the bonds, with the 2029 gilt also in favour with those looking to invest increased liquidity from foreign currency non-resident (banks) deposits, dealers said.

 

However, the coupon estimates for the new three-year bond varied sharply between 6.11% and 6.21% in the poll. Some traders were pricing their estimates and bids on the yield on the 6.03%, 2029, the last on-the-run three-year paper. Others said the coupon for the INR-110-billion supply would be sharply higher due to the different maturity dates on the bonds. The 2029 paper was last valued at INR 99.84, or 6.10% yield, according to indicative prices published by Financial Benchmarks India Pvt. Ltd. Thursday.

 

"There's no way that the coupon goes that low," a dealer at a state-owned banks. "People who are looking to the last bond for reference must realise the difference between a February maturity and August maturity for a three-year paper."

 

In the secondary market, long-term bonds continued to outperform gilts maturing in 10 years and below as traders did not expect to get the auction stock, which may be swept up by life insurers at the auction, dealers said. However, the 7.24%, 2055 gilt was off highs and aligned with the median estimate for its cut-off price in an Informist poll of 18 market participants. The median poll estimate was INR 98.63, lower than expectations of a cut-off around INR 98.70 in early trade.

Dealers were split on whether insurers would focus more on the 2055 bond or the 7.50%, 2056 green bond but said the supply would sail through with only INR 50 billion of each paper on offer. With green bonds qualifying as infrastructure investments according to insurance regualations, the 2056 cut-off yield is seen over 3 basis points lower than 30-year benchmark gilt, according to the Informist Poll.

 

"Insurance has expressed interest in FRAs (forward rate agreements) also and I think there will be cash demand in the green bond because of how it fulfils regulatory needs," a dealer at a foreign bank said. "So the bidding has gone through pretty well. I think the price action is just a correction because market has been very enthusiastic in buying long-term bonds this week, now for the fresh supply there may not be a premium."

 

The total trade volume in the government securities market at 1240 IST was INR 220.90 billion, down from INR 262.30 billion at 1230 IST Thursday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.72–6.80% during the day. (Aaryan Khanna)

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India Gilts: Tad up as US yields ease; gains capped before auction

 

	1000 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.32	101.34	101.28	101.33	101.27
YTM (%)	6.7508	6.7479	6.7571	6.7500	6.7582

 

NEW DELHI--1000 IST--Government bond prices opened slightly higher tracking a fall in US Treasury yields overnight but gains were limited before the INR-320-billion gilt auction at 1030-1130 IST, dealers said. The 10-year benchmark yield fell below 6.75% briefly for the first time in a month, at which point state-owned banks took profits, they said.

 

The 10-year US Treasury yield fell to 4.66% from 4.68% at 1700 IST Thursday. However, the yield on the benchmark 6.94%, 2036 gilt is not seen sustaining below 6.75% unless there is a fresh positive trigger such as a truce in the West Asia war that brings down Brent crude futures to $80 per barrel or lower, dealers said. By 0955 IST, Brent crude for October delivery hovered around $87 per barrel, marginally lower than at the close of Indian market hours Thursday.

 

"We opened slightly better as US yields have come down, even crude is holding at a relatively good level and not going beyond $90 (per barrel)," . "But market is not moving up as we are awaiting auction and WPI (wholesale price index inflation), those two things can move the market."

 

Meanwhile, WPI inflation is seen rising to double digits for July, to 10% from 9.87% in June. Traders are concerned about a pass-through to retail inflation but with CPI inflation at only 4.45% in July, do not see a repo rate hike at the next policy decision in October, dealers said. The data will be released at 1200 IST.

 

Trading activity was limited early before the auction but long-term bonds remained in favour, with robust demand expected for the 7.24%, 2055 and 7.50%, 2056 green bond being offered at auction Friday. With INR-100-billion of supply split between two bonds, bidding for each would be aggressive from life insurers, dealers said. Meanwhile, there is a widespread demand seen from banks for the new 2029 and 2033 bond issuances Friday, though traders do not expect bids to be aggressive, they said.

 

The total trade volume in the government securities market at 1000 IST was INR 81.50 billion, down from INR 99 billion at the same time Thursday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.72–6.80% during the day. (Aaryan Khanna)

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India Gilts: Seen tad up as US yields, crude oil ease; auction in focus

 

NEW DELHI – Government bond prices are seen opening slightly higher as US Treasury yields and crude oil prices eased overnight even as the focus was on the INR-320-billion weekly gilt auction, dealers said. Gains may be limited as traders are likely to book profits as the yield on the 10-year benchmark 6.94%, 2036 gilt falls to the psychologically crucial 6.75% level, they said. The 10-year benchmark yield has not dipped below 6.75% since Jul. 17.

 

The 10-year benchmark 6.94%, 2036 bond is expected to open at 6.75% Friday and move between 6.73% and 6.80% through the day, dealers said. The bond had ended at INR 101.27 or 6.7582% yield Thursday, with its price rising sharply due to purchases by foreign banks. Foreign banks net bought INR 57.15 billion of gilts in the secondary market Thursday, according to Clearing Corp. of India data.

 

Brent crude futures for October delivery were below $87 per barrel at 0820 IST from $87.36 per barrel at the end of the Indian gilt market hours Thursday. The 10-year US Treasury yield also fell to 4.65% from 4.68% at 1700 IST Friday. With no signs of a military escalation in the West Asia war and long-dated US bond supply sailing through, some dealers said foreign investors may pick up gilts Friday.

 

Bond prices are likely to track offshore triggers before the weekly gilt auction at 1030-1130 IST, dealers said. The government will sell INR 320 billion of four gilts, which includes a new 2029 bond, a new 2033 bond, the 7.24%, 2055 bond, and the 7.50%, 2056 green bond. Demand for the new 2029 and new 2033 bonds is expected from banks, with state-owned banks seen picking up about half the notified amount, dealers said. 

 

Traders speculate the presence of a foreign portfolio investor at the 2029 bond auction, since the FPI has picked up stock at previous 2029 bond auctions recently, they said. Demand from banks deploying foreign currency non-resident (banks) deposits is also seen for short-term bonds, but some asset and liability managers may bid at higher yields, dealers said. Insurers are seen bidding aggressively for both the 2055 gilt and the 30-year green bond.

 

Separately, wholesale inflation is likely to have a minimal impact on the gilt market at the release as the Reserve Bank of India tracks only retail prices for its monetary policy decision making, dealers said. However, high wholesale prices are expected to translate to retail inflation in coming months, they said. India's wholesale price index inflation likely rose to 10% in July from 9.87% in June, according to the median of an Informist Poll.  (Aaryan Khanna)

 

End

 

US$1 = INR 95.43

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

 

Edited by Saji George Titus

 

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