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Informist, Wednesday, Aug. 19, 2026

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds ended higher Wednesday as banks, including some state-owned lenders, got interested after yields hit a two-week high Tuesday. Prices were up for most of the session, tracking an overnight fall in US Treasury yields, with the ample liquidity surplus aiding demand, dealers said. Some domestic banks also deployed funds received through foreign currency non-resident (bank) deposits, they said.

 

Bond prices retreated briefly from the day's highs as near-month Brent crude oil futures rose intraday. Trade volumes were thin, with market participants exercising caution ahead of the release of the minutes of the Reserve Bank of India's Monetary Policy Committee's meeting held earlier in the month.

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 100.85 from INR 100.78 Tuesday. Its yield settled at 6.8170%, from 6.8269% at the end of the previous session. During the day, the 10-year benchmark bond moved in a thin range of 6.81-6.83%. The yield on the 10-year benchmark US Treasury note was 4.69% at 1700 IST, down from 4.75% at the same time Tuesday, ahead of the release of the minutes of the US Federal Open Market Committee's recent meeting due later Wednesday. Brent crude oil futures for delivery in October were $91.62 per barrel at the end of gilt market hours, coming off the day's high of $92.38 but hardly changed overnight.

 

"Above 80-81 (6.80-6.81% yield on the benchmark 10-year bond) level is still attractive to some banks," a dealer at a private-sector bank said. "So we are still seeing some buying coming in." State-owned banks usually refrain from purchases at lower yields, having been the largest net buyers of gilts Tuesday when yields climbed. However, some banks were still picking up bonds for their trading books and deploying foreign inflows while other state-owned banks preferred to sell gilts at a slight profit Wednesday, dealers said. 

 

The lacklustre trade made for low volumes, with the total turnover in the government securities market at INR 370.25 billion, down from INR 558.85 billion Tuesday, data from Clearing Corp. of India Ltd. showed. As of 1700 IST, foreign portfolio investors net purchased gilts worth INR 3.01 billion Wednesday through the Fully Accessible Route, according to CCIL data. This data is updated with a lag. Most traders said FPIs were not active on-screen Wednesday, with negligible trades in the "Reported Deals T+2" segment of the Reserve Bank of India's Negotiated Dealing System Order-Matching platform.

 

Some traders saw merit in buying the five-year benchmark 6.36%, 2031 bond after a jump in its yield this week. Traders expect FCNR(B) deposits to top $75 billion by the end of August, with foreign banks also likely to receive inflows and thus deploy them into government bonds, dealers said. Some expect banks raising offshore loans and bonds to deploy these flows temporarily into gilts, dealers said. Surplus liquidity also remains ample, with an incremental rise indicating robust inflows through these deposits, dealers said. 

 

Due to the surplus liquidity, the cut-off yield on the 91-day Treasury bill was the same as at last week's auction at 5.26%. However, the cut-off yields on the other two bills were higher on week, and slightly higher than expectations, reflecting the rise in gilt yields in the period, dealers said. "We are going to bid higher for T-bills because we had asked in secondary yesterday (Tuesday) and the offers itself were higher," a dealer at a mutual fund had said during the auction. 

 

OUTLOOK

Thursday, gilts are seen lower, since the minutes of the Monetary Policy Committee meeting held earlier in the month are viewed as more "hawkish" or restrictive than RBI Governor Sanjay Malhotra's policy statement, dealers said. Expectations of rate hikes are seen increasing, after the rate-setting panel focussed on the potential for the same. Deputy Governor Poonam Gupta said "a case for a hike may emerge during the course of the year" due to headline inflation projected at 5.9% in the December quarter. However, several traders had priced in such a difference in commentary compared to the policy statement, and bets of a rate hike in October remain low, they said. 

 

Bonds will also track the overnight movement in US Treasury yields and crude oil prices. Long-term US Treasury yields fell after Indian market hours after the US Treasury Department said it would at least double buybacks of 10- to 30-year US Treasury notes this quarter. The announcement was made shortly after the 30-year US Treasury yield hit a multi-decade high. Domestic traders believe the US Treasury secretary does not favour long-term bond yields rising. After the announcement, the Indian government bond yield curve is seen flattening. Traders will also track the minutes of the US Federal Open Market Committee's recent meeting. 

 

Traders will be on watch for foreign inflows and their impact on systemic liquidity and whether these flows are deployed into gilts, with expectations of at least $15 billion of flows within this fortnight. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.78% and 6.87%, dealers said. Any significant movement in the rupee and swap rates will also lend cues, they said.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	100.8500	6.8170%	100.7800	6.8269%
6.48%, 2035	97.8875	6.7928%	97.8100	6.8044%
6.36%, 2031	99.6600	6.4482%	99.6100	6.4612%
7.06%, 2041	100.5775	6.9963%	100.5525	6.9991%
7.24%, 2055	97.9800	7.4103%	98.0500	7.4043%

 

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India Gilts: Give up most gains on intraday rise in Brent crude price

 

	1622 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.79	100.90	100.75	100.82	100.78
YTM (%)	6.8255	6.8099	6.8311	6.8216	6.8269

 

MUMBAI--1622 IST--Prices of government bonds retreated from the day's highs to trade in a thin band tracking an intraday rise in crude oil prices, dealers said. Brent crude oil futures for delivery in October rose to $92.38 per barrel from $91.73 per barrel at 0900 IST. Most traders favoured the 10-year benchmark 6.94%, 2036 bond and the 15-year 6.68%, 2040 bond, with a few also picking up the five-year benchmark 6.36%, 2031 bond since its yield has risen about 11 basis points this week.

 

Trade was thin, with attention focused on the movement of crude oil prices and US Treasury yields, dealers said. Traders were cautious ahead of the release of the minutes of the Reserve Bank of India's Monetary Policy Committee meeting held earlier this month, with the minutes expected after market hours. Traders expect commentary to tilt towards "hawkishness" or adopting a more restrictive stance on curbing inflation.

 

"No one is buying or selling at these levels, if 6.80% (yield on the 10-year benchmark bond) comes then PSUs (state-owned banks) will start selling," a dealer at a state-owned bank said. The total turnover in the government securities market at 1622 IST was INR 324.60 billion, down sharply from INR 527.05 billion at 1630 IST Tuesday, according to data from the Clearing Corp. of India Ltd. The yield on the 10-year benchmark gilt is seen in the range of 6.80–6.87% for the rest of the day, dealers said.  (Cassandra Carvalho)

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India Gilts: PSU banks' buys keep prices up; T-bill cut-off yields seen higher

 

	1230 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.85	100.90	100.80	100.82	100.78
YTM (%)	6.8170	6.8099	6.8240	6.8216	6.8269

 

MUMBAI-–1230 IST--Prices of government bonds remained up as state-owned banks continued to make purchases near 6.82% yield on the 10-year benchmark 6.94%, 2036 bond, dealers said. The trade volume in the market remained low as traders maintained caution ahead of the release of minutes of the August Monetary Policy Committee meeting by the Reserve Bank of India Wednesday, dealers said. 

 

The total turnover in the government securities market at 1230 IST was INR 131.90 billion, significantly lower than INR 276.50 billion at 1230 IST Tuesday, according to data from the Clearing Corp. of India Ltd. Traders will track comments on liquidity, the West Asia war-related impact on inflation and growth, and outlook for the coming months in the minutes of August policy meeting, they said. In the minutes of the US Federal Open Market Committee, scheduled to be released at 2330 IST Wednesday, traders will track comments of the three members of the committee who had voted in favour of a rate hike, they said. 

 

At the Treasury-bills auction Wednesday, traders expect the cut-off yields to be slightly higher than the cut-offs set last week amid a rise in yields in the secondary market, they said. However, some dealers said firm demand at the auction from banks and mutual funds may keep the cut-off yields similar to that of last week's. The RBI had invited bids to raise INR 240 billion from the sale of 91-day, 182-day, and 364-day T-bills. The RBI is likely to set a cut-off yield of 5.26% on the 91-day T-bill, 5.55% on the 182-day T-bill, and 5.72% on the 362-day T-bill at the auction, according to the median of an Informist Poll. The RBI had set a cut-off yield of 5.26% on the 91-day T-bill, 5.54% on the 182-day T-bill, and 5.71% on the 364-day T-bill at the previous T-bill auction. 

 

Traders continue to monitor any developments in the West Asia war and its impact on Brent crude oil prices as it can lend further cues to the market, dealers said. The yield on the 10-year gilt is seen in a range of 6.78–6.85% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Up as US yields fall; Volume low ahead of MPC minutes release

 

	1000 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.88	100.90	100.80	100.82	100.78
YTM (%)	6.8127	6.8099	6.8240	6.8216	6.8269

 

MUMBAI--1000 IST--Prices of government bonds rose Wednesday, tracking an overnight fall in US Treasury yields, dealers said. Bond prices were also supported on purchases by a few state-owned banks near 6.82% yield on the 10-year benchmark 6.94%, 2036 bond, dealers said. However, gains on bond prices were capped as Brent crude oil prices stayed above the psychologically crucial levels of $90 per barrel Wednesday, dealers added.

 

The total trading volume in the government securities market at 1000 IST was INR 64.45 billion, sharply lower than INR 134.25 billion at 1030 IST Tuesday, according to data from the Clearing Corp. of India Ltd. Traders refrained from placing aggressive bets as they await minutes of the August Monetary Policy Committee meeting, they said.

 

A rise in surplus liquidity in the banking system also aided the rise in bond prices, dealers said. Systemic liquidity likely rose on the back of robust inflows through foreign currency non-resident (banks) deposits, dealers said, keeping alive expectations that flows by the end of this month could top $75 billion. Banks expect healthy FCNR flows in the last two weeks of August after the Reserve Bank of India cut short its concessional dollar-rupee swap facility on these deposits of three- to five-year tenures to Aug. 31 from earlier deadline of Sept. 30. These flows are likely to come into the government securities market and thus, support bond prices, dealers said.  

 

Wednesday, bond prices were supported on purchases by some state-owned banks, dealers said. State-owned banks have remained net buyers so far this week, with purchases worth up to INR 129.79 billion till Tuesday, data from the Clearing Corp. of India showed.    

 

On the global front, the fall in US Treasury yields helped bond prices rise further, dealers said. The yield on the 10-year benchmark US Treasury note was at 4.69% at 1000 IST, significantly lower than 4.75% at the end of Indian gilt market hours Tuesday. Wednesday, traders will track the minutes of the US Federal Open Market Committee's recent meeting at 2330 IST, they said. Attention will be on the interest rate differential between India and the US as the 10-year benchmark US Treasury yield hit its highest since January 2025 Tuesday.

 

Brent crude oil prices remained above $90 per barrel, which weighed on bond prices, dealers said. At 1000 IST, the near-month Brent futures traded at $91.64 per barrel, against $90.88 per barrel at 1700 IST Tuesday. Traders will closely monitor any development in the West Asia war and its impact on Brent crude oil prices as it can lend further cues to the market, dealers said. The yield on the 10-year gilt is seen in a range of 6.78–6.85% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen down as Brent price nears $92/bbl; MPC minutes to lend cues

 

MUMBAI – Prices of government bonds are seen opening slightly lower Wednesday, tracking an overnight rise in prices of Brent crude oil, dealers said. Traders are likely to maintain caution during the trade session Wednesday as they await the minutes of the Reserve Bank of India-led Monetary Policy Committee's August meeting, they said.  

 

The 10-year benchmark 6.94%, 2036 bond is expected to open around 6.84% Wednesday and move between 6.78% and 6.85% through the day, dealers said. Tuesday, the bond ended at INR 100.78, or 6.8269% yield. The total turnover in the government securities market is expected to remain lower Wednesday, against Tuesday's volume, as traders will refrain from placing aggressive bets ahead of the MPC minutes, dealers said.

 

The minutes of the MPC meeting, held earlier this month, will be released post-market hours Wednesday. Traders will closely track commentary on the impact of the war in West Asia on domestic interest rates, they said. The outcome of the meeting was interpreted as unexpectedly "slightly dovish" or less restrictive than dealers had foreseen. However, the minutes could prove otherwise, dealers said. Two rate hikes by the RBI's rate-setting panel in financial year 2027 (Apr-Mar) are still on the table, with the hikes likely in December and February, dealers said. Albeit, India Ratings in a note Tuesday said it expected the committee to keep the repo rate on hold in 2027.

 

On the global front, traders will also track the minutes of the US Federal Open Market Committee's recent meeting due Wednesday at 2330 IST. Attention will be on the interest rate differential between India and the US as the 10-year benchmark US Treasury yield Tuesday hit its highest since January 2025. Traders will also watch out for foreign inflows and their impact on systemic liquidity and whether these flows are deployed into gilts, they said. 

The uncertainty around the West Asia war may also keep traders on the sidelines of the market Wednesday, dealers said. Tuesday, post Indian money market hours, US President Donald Trump posted a graphic on social media calling Oman and the Strait of Hormuz US territory. Following the move, Brent prices moved up overnight, which is likely to weigh on bond prices Wednesday, dealers said. Near-month Brent crude oil futures traded above the psychologically crucial level of $90 per barrel and were at $91.83 per barrel at 0750 IST, up from $90.88 per barrel at 1700 IST Tuesday.

 

Bond prices are likely to be supported by purchases from state-owned banks if the yield on the 10-year benchmark 2036 bond rises past 6.84%, dealers said. These banks had also stepped in on Tuesday and Monday to buy bonds in the secondary market after the yield rose past 6.80%. State-owned banks were the largest net buyers of gilts Tuesday, with purchases worth up to INR 55.25 billion, according to data from Clearing Corp. of India Ltd.

 

Wednesday, the RBI will auction INR 90 billion of the 91-day Treasury bills, INR 80 billion of 182-day T-bills, and INR 70 billion of the 364-day T-bills between 1030 IST and 1130 IST. The cut-off yields set on these papers are likely to be similar to the cut-off yields set at the auction previous week as liquidity in the banking system remains comfortable, dealers said. The RBI had set a cut-off yield of 5.26% on the 91-day T-bill, 5.54% on the 182-day T-bill, and 5.71% on the 364-day T-bill at the previous T-bill auction.  (Diksha Tripathy) 

 

End

 

US$1 = INR 95.7525

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

 

Edited by Rajeev Pai

 

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