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Informist, Monday, Sept. 21, 2026

 

By Cassandra Carvalho

 

MUMBAI – Government bond prices ended higher Monday, tracking an intraday fall in Brent crude oil prices as trading neared its close, dealers said. Volumes were low for most of the session, with traders positioned lightly amid uncertainty on several fronts. Cut-off prices at the Reserve Bank of India's sale of government bonds through an open market operation auction improved from those at last week's OMO sale auction, indicating better demand, dealers said. 

 

The 10-year benchmark 6.94%, 2036 gilt ended at INR 99.23, up from INR 99.10 Friday. The bond's yield fell to 7.0497% from 7.0686% at the end of the previous session. The bond underperformed other maturities due to fresh supply of INR 340 billion of a 10-year bond Friday, dealers said. Near-month Brent crude oil futures fell to $100.20 per barrel at about 1600 IST, before rising to $101.15 per barrel at 1700 IST, but down from $103.42 at 1700 IST Friday. Reports said US President Donald Trump has indicated readiness to meet Iranian President Masoud Pezeshkian regarding the war. Both officials will be in New York this week for the UN General Assembly.

 

"When Brent started falling, we saw a range breakout in bonds, that 3 to 4 paise range it was moving in, and then we saw some volume pick up also, but till 3-3:30 (1500-1530 IST) there wasn't much happening. Everyone is light (in positioning)," a dealer at a private-sector bank said. 

 

At the open market operation auction, the central bank sold gilts worth the entire notified amount of INR 250 billion, as expected. Greater attention was on the cut-off prices, and traders said the cut-off prices at the auction were a healthy sign of demand compared to the last OMO sale auction conducted Thursday. The results were largely within those estimated in an Informist Poll. At Thursday's auction, the central bank set cut-off yields about 10 basis points higher than the previous day, as indicated by Financial Benchmarks India Pvt. Ltd. Monday, cut-off yields were about 5 bps higher, with the smaller notified size compared to Thursday's auction aiding demand, dealers said. The state bond auctions, scheduled for Tuesday, are also lower than last week, supporting demand, they said. 

 

Traders had also expected firm demand at the INR-300-billion switch auction, although the government switched gilts worth only INR 187.74 billion. Several traders prefer long-term gilts, as the yield curve is expected to flatten further due to rate hikes. The switch auction offered an opportunity to pick up long-term bonds and exit ultra-short-term bonds, dealers said. Albeit, the spread between the five-year benchmark 6.36%, 2031 bond and the 10-year benchmark bond expanded slightly on Monday to 32 bps, from 30 bps on Friday. Dealers said this spread is unlikely to compress further until the Monetary Policy Committee actually hikes the repo rate. Meanwhile, the 15-year benchmark 7.06%, 2041 bond, and 30-50 year bonds ended sharply higher, as traders purchased them. The 2041 bond ended 21 paise higher, while the 7.71%, 2066 bond ended 40 paise higher. 

 

"People are now just waiting for the rate hike to happen. If it happens, it'll be good for the market. We won't see a rally per se, but I'm not seeing it (bond prices) move much lower from here," a dealer at a private-sector bank said. 

 

Total turnover in the government securities market was INR 305.05 billion Monday, down from INR 388.80 billion at the end of Indian gilt market hours Friday, data from Clearing Corp. of India showed.

 

OUTLOOK

On Tuesday, gilt prices will track movement in US yields and crude oil prices at open. Traders expect the 10-year benchmark bond yield to trade in a range of 7.00-7.10% until the Reserve Bank of India's Monetary Policy Committee meeting next month, if crude prices stay at current levels, dealers said. Many traders expect the MPC to hike the repo rate by 25 basis points and announce more measures to drain durable liquidity, including expectations of more OMO sales of INR 250 billion or INR 500 billion. A 25 bps rate hike is already priced into bonds, making for a lacklustre trade, dealers said. Some traders find current yields attractive for buying bonds, since the 10-year bond is unlikely to sustain a rise above its May high of 7.14%, they said. 

 

Traders will also track the result of the INR-167.50-billion state bond auction Tuesday, which is lower than the indicated amount of INR 237 billion, easing market sentiment Monday.

 

Traders also await the release of the borrowing calendar for state and central government bond issuances for the next quarter and the second half of the current financial year, respectively. The proportion of different bond tenures in the calendar will provide cues on the shape of the gilt yield curve, dealers said. Most traders expect little change in the Centre's plan compared to that in Apr-Sept, though bankers have put forth several preferences to the central bank. The RBI has held several meetings with market participants this month to discuss the Centre's borrowing calendar, they said. Some expect more supply of seven-year bonds, while others expect more 15-year bond supply, and still others expect more supply of three- to five-year bonds. 

 

Any significant movement in the rupee and swap rates will also lend cues, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 7.00% and 7.10%, dealers said.

 

	MONDAY		FRIDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	99.2300	7.0497%	99.1000	7.0686%
6.48%, 2035	96.3500	7.0319%	96.3200	7.0363%
6.36%, 2031	98.6000	6.7307%	98.4500	6.7708%
7.06%, 2041	98.7175	7.2006%	98.5050	7.2243%
7.24%, 2055	96.0900	7.5744%	95.8300	7.5975%

 

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India Gilts: Off highs; OMO sale auction result in line with market view

 

	1520 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.13	99.20	99.12	99.17	99.10
YTM (%)	7.0650	7.0544	7.0657	7.0584	7.0686

 

MUMBAI-–1520 IST--Government bond prices pared some gains and were off the day's high Monday, tracking an intraday rise in US Treasury yields and Brent crude oil prices, dealers said. Bond prices did not react much to the result of the open market operations conducted by the Reserve Bank of India as it was largely on expected lines, dealers said.   

 

The RBI invited bids to sell INR 250 billion worth of bonds through the OMO auction Monday. This was the second tranche of the INR-1-trillion OMO sales announced by the RBI on Sept. 11. Traders had expected the cut-off yield on bonds to be around 5–6 basis points higher than the indicative prices published by Financial Benchmarks India Pvt. Ltd. Friday. The RBI did not sell 8.28%, 2027 gilt at OMO auction Monday. The other papers – including 7.17%, 2028 bond, 6.75%, 2029 bond, 7.17%, 2030 bond, 6.10%, 2031 bond, and 7.95%, 2032 bond – saw good demand at the auction, dealers said. 

 

"Very good cut-offs (at OMO sale auction), there's good demand," a dealer at a private sector bank said. "Less duration and a smaller size, this time SDL auction (state government securities' auction) also came in a small size."

 

Bond prices faced some pressure during the day as Brent crude oil prices and US Treasury yields moved up, dealers said. Brent crude oil prices for November delivery were at $102 per barrel at 1500 IST, up from the day's low of $101.19 per barrel. The yield on the 10-yar US Treasury also rose during the day and was at 4.96%, up from 4.95% at 0900 IST. Traders will closely track any movement in oil prices and US bond yields as it could impact Indian bond prices, they said. 

 

The total traded volume in the government securities market at 1520 IST was INR 158.25 billion, lower than INR 299.65 billion at 1535 IST Friday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 7.03-7.10% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Remain up in thin trade on fall in oil; OMO, switch result eyed

 

	1200 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.16	99.20	99.13	99.17	99.10
YTM (%)	7.0595	7.0544	7.0643	7.0584	7.0686

 

MUMBAI--1200 IST--Government bond prices were up in thin trade following the intraday fall in Brent crude oil prices, dealers said. Trade volume in the secondary market remained subdued as traders refrained from placing aggressive bets on caution of escalation in West Asia, dealers said. Some traders also await the result of the switch and open-market operation sales auction for further cues, dealers said.   

 

Brent crude oil futures for November delivery were at $101.95 per barrel, down from the day's high of $104.90 per barrel and down from $103.35 per barrel at the end of Indian trading hours Friday. The yield on 10-year US Treasury yields was at 4.97%, slightly lower from the day's high of 4.98% but unchanged from 1700 IST Friday.  

 

"There is not even INR 5000 crore (INR 50 million) worth of volume in the 10-year (6.94%, 2036) bond...even if you add odd lot volume," a dealer at a primary dealership said. "These are just reaction to movement in crude...only intraday trading positions." 

 

At the switch auction, traders expect the Reserve Bank of India to set the cut-off prices on the destination securities near the indicative prices published by Financial Benchmarks India Pvt. Ltd. on Friday. A switch operation entails replacing a security maturing in the near term with a longer-maturity paper, effectively postponing the government's debt repayment to a later date, which will keep government borrowing in the current financial year within expectations, dealers said. In the past five switch auctions conducted in 2026-27 (Apr-Mar), the government has switched gilts totalling INR 909.90 billion. Traders expect the government to raise around INR 8 trillion through bond sales in the second half of the current financial year, with the borrowing calendar likely to be released towards the end of this week. The indicative borrowing calendar for states is expected to be released next week, dealers said. 

 

"Cut-off at the auction is likely to be near FBIL levels because there is demand from the banks," a dealer at a private sector bank said. "The OMO auction will also go through...cut-off yields could be some 5 basis points higher than FBIL level."

At the INR-250-billion worth of bond sales through the OMO auction on Monday, traders expect the cut-off yield on bonds to be around 5–6 basis points higher than the indicative prices published by Financial Benchmarks India Pvt. Ltd. on Friday. This is the second tranche of the INR-1-trillion OMO sales announced by the RBI on Sept. 11. Traders will likely focus on the cut-off set on the 7.17%, 2030 bond, the 6.10%, 2031 bond, and the 7.95%, 2032 bond. While some traders said the participation at the auction was good, others said a fresh supply of gilts would weigh on the cut-off yields. 

 

The total traded volume in the government securities market at 1200 IST was INR 69.95 billion, about 41% lower than than INR 118.70 billion at 1130 IST Friday, according to data from the Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 7.03-7.10% during the day, dealers said. The yield on the 10-year benchmark bond moved less than 1 basis point till 1200 IST Monday.  (Janwee Prajapati)

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India Gilts: Up as Brent crude oil prices fall; high US yields cap gains

 

	0930 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.17	99.20	99.15	99.17	99.10
YTM (%)	7.0592	7.0544	7.0614	7.0584	7.0686

 

MUMBAI--0930 IST--Government bond prices opened higher Monday due to a fall in Brent crude oil prices over the weekend, dealers said. However, a rise in US yields capped gains in bond prices, dealers said. Traders avoided building positions and placing fresh bets ahead of the INR-250-billion auction, wherein the Reserve Bank of India will sell gilts through open market operations.

 

The total traded volume in the government securities market was low till 0930 IST as traders avoided taking fresh positions before the auction. The total traded volume in the government securities market at 0930 IST was INR 16.00 billion, lower than INR 17.55 billion at 0930 IST Friday, according to data from the Clearing Corp. of India Ltd. Traders expect the auction result to lend further cues to the market, they said. 

 

Bond prices were supported due to a fall in Brent crude oil prices, dealers said. Brent crude oil futures for November delivery were at $101.66 per barrel at 0930 IST, down from $103.42 per barrel at the end of Indian gilt market hours Friday. Oil prices fell after a Reuters report said Saudi Arabia was seeking to quickly restart some oil flows through its main east-west pipeline after it was damaged in attacks last week. 

 

"Oil prices have come down and that's helping prices in the secondary market," a dealer at a state-owned bank said. "People are also waiting for OMO and switch today (Monday). Once the results of these auctions are out, the market will get a direction based on that."  

 

The 10-year benchmark US Treasury yield was at 5.00% at 0930 ISt, up from 4.97%, which weighed on bond prices Monday. Traders will assess any movement in US yields as it could impact Indian bond prices.

 

Traders will closely track any developments in the war which could impact crude oil prices and in turn bond prices. The yield on the 10-year gilt is seen in a range of 7.03-7.10% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen down as US ylds rise; INR-250-bln OMO auction to lend cues

 

MUMBAI – Government bond prices are seen opening lower Monday, tracking a rise in US Treasury yields over the weekend, dealers said. A fall in Brent crude oil prices is likely to support bond prices. Despite falling, oil prices stayed above the psychologically crucial $100-per-barrel mark, which may cap gains in bond prices, dealers said. Traders are likely to refrain from placing aggressive bets ahead of the open market operations, results of which are expected to lend cues to the market.

 

The yield on the 10-year benchmark 6.94%, 2036 bond is expected to open around 7.07% Monday and move between 7.00% and 7.10% during the day, dealers said. Friday, the bond ended at INR 99.10, or 7.0686% yield. The volume in the first half is expected to remain low, with traders likely to avoid taking fresh positions ahead of OMO sales and switch auctions Monday, they said.

 

Traders will closely track the result of the INR-250-billion auction, where the Reserve Bank of India will sell gilts through open market operations at 0930-1030 IST. This is the second tranche of the INR-1-trillion OMO sales the central bank had announced for September. The cut-off yields at the OMO auction Thursday were higher than expected, and may rise further at the next auction, as the RBI is seen continuing to sell the entire notified amount of gilts as it did Thursday, dealers said. 

 

Bond prices are also likely to take cues from the result of the switch auction Monday, dealers said. The government will switch eight government bonds worth INR 300 billion maturing between 2027 and 2030 with five longer-term gilts through an auction Monday. The auction will take place between 1030 IST and 1130 IST. This is the sixth gilt switch auction in 2026-27 (Apr-Mar). The switch auction is likely to see active participation from banks, dealers said. 

 

Monday, bond prices are likely to face pressure due to a significant rise in US Treasury yields, dealers said. The yield on the 10-year benchmark US Treasury note was at 5.00% at 0800 IST Monday, up from 4.97% at the end of Indian gilt market hours Friday. Meanwhile, Brent crude oil prices fell over 1.6% since Friday, and were at $101.75 per barrel at 0800 IST. Crude oil prices declined as investors focused on the prospect of a recovery in Saudi Arabian shipments despite ongoing attacks by Yemen's Houthis, which have heightened tensions in the West Asia. With inflationary pressures rising amid concern over oil supplies stemming from the war in West Asia, central banks are likely to hike policy rates, dealers said. 

 

Traders expect the 10-year benchmark bond yield to move in a range of 7.00-7.10% until the Reserve Bank of India's Monetary Policy Committee meeting next month, if crude prices stay at current levels, dealers said. Several of them expect the MPC to hike the repo rate by 25 basis points and announce more measures to drain durable liquidity, including expectations of more OMO sales of INR 250 billion or INR 500 billion. A rate hike of 25 bps is already priced into bonds, making for lacklustre trade, dealers said. Some traders find current yields lucrative to buy bonds since the 10-year bond is unlikely to sustain a rise above its May high of 7.14%, they said. 

 

Traders also await the release of the borrowing calendar for state and central government bond issuances for the next quarter and the second half of the current financial year, respectively. The proportion of different bond tenures in the calendar will provide cues on the shape of the gilt yield curve, dealers said. Most traders expect little change in the Centre's plan compared to that in Apr-Sept, though bankers have put forth to the central bank several preferences. The RBI has held several meetings with market participants this month to discuss the Centre's borrowing calendar, they said. Some expect more supply of seven-year bonds, while some expect more 15-year bond supply, while others expect more supply of three- to five-year bonds.  (Diksha Tripathy)

 

End

 

US$1 = INR 95.8150

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

 

Edited by Saji George Titus

 

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