More Stories

Informist, Monday, Sept. 28, 2026

 

By Janwee Prajapati

 

MUMBAI – Government bond prices closed sharply lower on Monday, tracking intraday and overnight rises in Brent crude oil prices and US Treasury yields, dealers said. Long-term bonds, including the 15-year benchmark 7.06 41 gilt, underperformed after the government released its Oct-Mar bond borrowing calendar on Friday. Short-term bonds also fell on expectations of up to INR 1 trillion in bond sales via additional open-market operation auctions in October. Traders remained cautious ahead of the RBI's Monetary Policy Committee meeting in October, dealers said.

 

The benchmark bond ended at INR 98.31, down from INR 98.76 Friday. Its yield rose to 7.1848% from 7.1194% at the end of the previous session, ending at its highest level since April 2024. The rise in the yield of the 6.94%, 2036 bond above 7.14%, the highest level in the current financial year, triggered stop losses, which further weighed on prices, dealers said. Traders expect the 10-year bond yield to rise to as high as 7.25%, a technical level, dealers said. Others, however, expect yields to reverse from the psychologically crucial 7.20% level. Some participants do not expect the yield to sustain a rise above the 7.18% level, dealers said. However, if Brent crude oil prices fall back to below $100 per barrel, the yield on the 10-year bond is likely to fall to 7.00-7.05%, dealers said.

 

Brent crude futures for November delivery were at $107.80 per barrel, up from $106.34 per barrel at 0900 IST and up from $104.99 per barrel at the end of Indian trading hours Friday. Brent crude oil futures hit their highest level since May and rose more than $18 per barrel in September. Oil prices rose amid uncertainty over the prospects of a near-term truce between the US and Iran. US President Donald Trump rejected Iran's latest proposal to re-open the Strait of Hormuz, although he expected negotiations to restart this week, according to media reports. Iran had reiterated over the weekend that it would reopen the Strait of Hormuz within seven days but said it would not compromise on its conditions. 

 

"So today (Monday) it was mostly crude oil prices which rose to near $109 per barrel," a dealer at a public sector bank said. "US yields were also up... over the weekend the US denied a truce (between the US and Iran) due to which we saw 5.22% on the 10-year US Treasury note today." 

 

The yield on the 10-year benchmark US Treasury note was at 5.22%, up from 5.21% at 0900 IST and 5.18% at the end of Indian trading hours Friday. US Treasury yields rose, tracking unrest in West Asia and increased bets on additional Federal Reserve rate hikes. Next week, traders will also watch the release of the August personal consumption expenditure report and the September jobs report. With yields on long-dated Treasury notes and bonds at levels not seen in two decades, the economic data could determine whether rates rise even further.

 

On the domestic front, the 15-year benchmark 7.06%, 2041 bond ended at INR 97.18, down from INR 98.03 Friday. The bond yield rose nearly 10 basis points to 7.37%, up from 7.28% at the end of the previous session. The fall in 15-year benchmark bond prices was largely due to a higher share of supply in the second half of the year in the borrowing calendar, released Friday after market close, dealers said. The 15-year bond issuance will make up 17.6% of the calendar, against 14.5% in Apr-Sept. The spread of the 15-year bond over the 10-year gilt rose to 19 basis points Monday from 16 bps at close Friday and a low of 12 bps on Sept. 11.

 

Meanwhile, bonds maturing for up to five years also fell sharply in line with the broader market due to supply concerns. The yield on the 6.36%, 2031 bond rose to 6.91%, the highest for a five-year benchmark bond since July 2024. Traders expect the central bank to sell bonds through more open-market operation auctions, which are likely to be announced at the RBI's MPC in October, dealers said. Traders largely expect the auction size to be between INR 500 billion and INR 1 trillion, with supply concentrated in 5-year to 7-year bonds. The central bank announced sales of INR 1 trillion of gilts through auctions in September, with the third and final tranche conducted earlier Monday.  

 

At the INR 250 billion OMO auction on Monday, the cut-off prices were broadly in line with market expectations, dealers said. Foreign banks and state-owned banks likely picked up bonds at the RBI's OMO sale auction Monday, dealers said. Banks bought bonds at the auction for asset-liability management, they said. Private banks likely refrained from aggressive purchases at the auction, a dealer at a private-sector bank said. The central bank accepted the highest amount for the 6.54%, 2032 gilt, while it received the most bids for the 7.26%, 2032 bond. The 6.54%, 2032 bond also saw a 50% partial allotment at the auction. 

 

"The auction was good... participants were aggressive," a dealer at a private sector bank said. "Current levels are attractive to add (these bonds in the portfolio), so everybody picked up bonds at the auction." 

 

Total turnover in the government securities market was INR 483.25 billion Monday, down from INR 526.55 billion on Friday, data from Clearing Corp. of India showed.

 

OUTLOOK

Tuesday, bond prices may take cues from developments in the West Asia war and their impact on crude oil prices and US Treasury yields. Any escalation in West Asia will significantly impact bond prices, dealers said. Later in the day, traders will also track the result of INR 222 billion worth of state government auctions on Tuesday. The quantum is higher than the INR 206.50 billion notified in the borrowing calendar for Jun-Sept.

 

Traders will also watch the release of the August personal consumption expenditure report and the September jobs report. With yields on long-dated Treasury notes and bonds at levels not seen in two decades, the economic data could determine whether rates rise even further. Any rise in US yields will also affect yields on domestic bonds, dealers said. 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 expected to move between 7.00% and 7.18%, dealers said.

 

	MONDAY		FRIDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	98.3100	7.1848%	98.7550	7.1194%
6.48%, 2035	95.5800	7.1531%	95.9650	7.0927%
6.36%, 2031	98.0500	6.8805%	98.2800	6.8180%
7.06%, 2041	97.1800	7.3743%	98.0325	7.2775%
7.24%, 2055	94.8000	7.6898%	95.7500	7.6045%

---

India Gilts: Remain sharply down amid intraday rise in Brent crude, US yields

 

	1545 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	98.39	98.85	98.30	98.85	98.76
YTM (%)	7.1727	7.1055	7.1863	7.1055	7.1194

 

MUMBAI--1545 IST--Government bond prices remained sharply down as Brent crude oil prices rose past $108 per barrel and US Treasury yields climbed further, dealers said. Bond prices did not react much to the result of the open market operations where the Reserve Bank of India had invited bids to sell INR 250 billion of gilts. The auction result was broadly on expected lines, dealers said. 

 

Foreign banks and state-owned banks likely picked up bonds at the RBI's OMO sale auction Monday, dealers said. Banks also bought bonds at the auction for asset-liability mismanagement, they said. The entire notified amount of INR 250 billion was picked up at the auction. This auction marked the completion of RBI's INR-1-trillion OMO sale. Traders anticipate that the RBI may sell bonds of up to INR 1 trillion through more open market operation auctions in October, dealers said.   

 

"Foreign banks were there because they had received robust FCNR (Foreign Currency Non-Resident (Banks)) deposits, so they used this opportunity to deploy funds," a dealer at a private sector bank said. "We can also see more OMOs going ahead."  

 

On Monday, a rise in oil prices weighed on bond prices, dealers said. Brent crude oil futures for November delivery were at $108/48 per barrel at 1545 IST, up over 2% from 0900 IST. Traders attributed the rise in oil prices to stalled US-Iran talks and uncertainty over the end of the war in West Asia. A consequent rise in US Treasury yields also pulled down Indian bond prices during the day, dealers said. The yield on the 10-year benchmark treasury note rose to 5.2340%, hitting its highest level since mid-2007. 

 

The falling bond prices found some support from purchases by state-owned banks near 7.18% yield on the 10-year 6.94%, 2036 gilt Monday. On the other hand, stop-losses triggered at 7.14-7.15% yield on the 10-year benchmark 2036 bond weighed on bond prices, dealers said.      

 

The total turnover in the government securities market at 1545 IST was INR 391.60 billion, down from INR 418.00 billion at 1530 IST Friday, data from Clearing Corp. of India Ltd. showed. The yield on the 10-year gilt is seen in a range of 7.10-7.20% during the day, dealers said. However, traders also expect the bond yield to go up to 7.25% if oil prices and US yields rise further, they said.   (Diksha Tripathy)

---

India Gilts: Long-term bonds tumble after H2 calendar; OMO fears also drag

 

--Dealers: Fear of RBI OMO sale, MPC rate hike Oct drag short-term gilts Mon 

--Dealers: H2 supply cut to not benefit 3-,5-year gilts on OMO sale fear 

--CONTEXT: 3-year gilt makes up 6.9% of H2 borrow calendar vs 8.1% in H1 

--CONTEXT: 5-year gilt makes up 12.1% of H2 borrow calendar vs 15.4% in H1 

--Dealers: RBI may sell INR 1 tln of 2028-2033 gilts via OMO auctions Oct 

 

	1305 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	98.39	98.85	98.38	98.85	98.76
YTM (%)	7.1734	7.1055	7.1752	7.1055	7.1194

 

	1305 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
7.06%, 2041
PRICE (INR)	97.14	97.74	97.12	97.74	98.03
YTM (%)	7.3789	7.3106	7.3811	7.3106	7.2775

 

	1305 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.36%, 2031
PRICE (INR)	98.10	98.15	98.10	98.15	98.28
YTM (%)	6.8670	6.8534	6.8670	6.8534	6.8180

 

NEW DELHI--1305 IST--Long-term bonds, including the 15-year benchmark 7.06%, 2041 gilt, were the worst hit gilts Monday after the release of the government's borrowing calendar through dated securities for Oct-Mar on Friday. Concerns that the Reserve Bank of India may sell bonds of up to INR 1 trillion through more open market operation auctions in October nullified the benefit of a cut in the share of short-term bonds and dragged prices of those bonds lower, dealers said.

 

The yields on 15- to 50-year benchmark bonds rose 8-10 basis points Monday, compared with a rise of only 5 basis points in the 10-year benchmark 6.94%, 2036 gilt. The 7.06%, 2041 gilt was sharply down even in early trade, when the price of the 2036 gilt rose slightly, as 15-year bond issuance will make up 17.6% of the calendar, against 14.5% in Apr-Sept. The spread of the 15-year bond over the 10-year gilt rose to over 20 basis points at 1247 IST from 16 bps at close Friday and a low of 12 bps on Sept. 11. 

 

"The long-term bonds are reacting in line with the calendar and that is having an impact on the 10-year as well, especially as traders are heavy after the auction," a dealer at a primary dealership said. The government sold INR 340 billion of the benchmark 6.94%, 2036 gilt at auction Friday. "For us, it is also quite certain that the way the calendar is scheduled, the RBI is going to continue with OMO sales."

 

In Apr-Sept, the share of bonds maturing in over 30 years had shrunk to less than 25% from 29.4% and 35.0% in the borrowing calendar for the second half and first half of FY26, respectively. In the newly announced calendar, it rose again to 28.0%, with most of the increase coming in the 30-year tenure. The benchmark 7.24%, 2055 gilt's price fell by nearly a rupee Monday after the change in the borrowing pattern was announced. Long-term investors would demand higher yields for gilts at a time when state government security supply also rises seasonally and has been concentrated in 15 years and above, dealers said. 

 

Meanwhile, bonds maturing in up to five years also fell sharply in line with the broader market due to the supply concerns. The yield on the 6.36%, 2031 bond rose to 6.87%, the highest for a five-year benchmark bond since July 2024. The central bank announced sales of INR 1 trillion of gilts through auctions in September, with the third and final tranche conducted earlier Monday. Reports on Friday quoted Department of Economic Affairs Secretary Anuradha Thakur saying the supply of short-term gilts was cut keeping in mind the RBI's OMO sales.

 

The three-year bond makes up 6.9% of the Oct-Mar calendar, against 8.1% until September, while the five-year gilt's share is only 12.1% in the second half, compated to 15.4% in the first half of the financial year. However, even in October, the central bank's bond sales are likely to be comprise gilts maturing between 2028 and 2033, dealers said.

 

Even the 10-year gilt's yield rose past 7.17% Monday its highest since Apr. 30, 2024, as traders trimmed their gilt holdings across tenures due to the higher long-term bond supply. Investments in longer-term bonds lead to greater accretion of risk on investors' balance sheets, as measured by PV01 or the price value of one basis point move in yield. The appetite of banks and mutual funds to absorb the fresh supply may take a hit as they fear a further rise in yields, dealers said.

 

"We should be looking at 7.20-7.25% (on the 10-year gilt yield) before the policy," a dealer at a state-owned bank said, referring to the Monetary Policy Committee's rate decision on Oct. 7. "It is going to be difficult to find a level to buy before that, even the technical resistance was broken at 7.14-7.15%."

 

Bond prices remained down and volumes were higher due to the sharp rise in US Treasury yields and crude oil prices, with the war in West Asia contiuing, dealers said. State-owned banks have already stepped up purchases of the 6.94%, 2036 gilt and may be able to prevent a rise in the 10-year gilt's yield above 7.18% Monday, provided global triggers do not turn more adverse, they said. 

 

The total turnover in the government securities market at 1305 IST was INR 258.30 billion, up from INR 183.75 billion at 1330 IST Friday, data from Clearing Corp. of India Ltd. showed. The yield on the 10-year gilt is seen in a range of 7.10-7.20% during the day, dealers said.  (Aaryan Khanna)

---

India Gilts: Slump as oil rises; 10-yr yield hits over 2-yr high of 7.17%

 

--15-year benchmark gilt falls sharply as H2 calendar ups share of issuance 

--CONTEXT: 15-year gilt makes up 17.6% of H2 borrow calendar vs 14.5% in H1 

--India's 10-year benchmark gilt yield hits 7.1451%, highest since May 2024 

--Dealers:Stop-losses triggered in 10-yr gilt as yld tops FY27 high of 7.14% 

 

	1050 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	98.45	98.85	98.42	98.85	98.76
YTM (%)	7.1638	7.1055	7.1686	7.1055	7.1194

 

MUMBAI--1050 IST--Government bond prices slumped Monday, tracking a rise in Brent crude oil prices and US Treasury yields over the weekend, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond rose past 7.16% in the initial hour of the trading session, marking its highest level since April 2024. 

 

The 15-year 7.06%, 2041 gilt also fell sharply after the share of its issuance in the borrowing calendar for Oct-Mar was increased, dealers said. The government raised the share of the seven- and 15-year securities in the calendar, while also reducing the share of bonds maturing up to five years due to the hefty redemptions already lined up in those tenures. The 15-year bond will make up 17.6% of the issuance. This is the largest ever sequential increase and higher than 14.5% in the first half of the financial year.

 

The yield on the 10-year benchmark bond also rose, as crude oil prices and US yields weighed on it, dealers said. Brent crude oil futures for November delivery rose above $107 per barrel, up over 2% from the end of Indian gilt market hours Friday. The uncertainty over the end of the US-Iran war kept crude oil prices elevated, dealers said. US yields also added to the fall of Indian bond prices, dealers said. The yield on the 10-year benchmark US Treasury note was 5.21%, up from 5.18% at 1700 IST Friday. Traders will closely monitor a further rise in oil prices and US yields as it is expected to lend further cues to the market during the day, dealers said. 

 

The rise in the yield of 6.94%, 2036 bond above 7.14%, which was the highest level of the current financial year, triggered stop losses which further weighed on prices, dealers said. Traders expect the yield on this bond to go up to 7.19-7.20% if the sell-off continues. Traders expect the next key level to be 7.25% on the 10-year benchmark bond. 

 

Traders also await the result of the open market operations wherein the Reserve Bank of India invited bids to raise INR 250 billion through the sale of bonds Monday. The demand at the OMO auction might be dampened amid a significant rise in yields in the secondary market, dealers said. The cut-off yields at the auction could be higher than the indicative levels published by Financial Benchmarks India Pvt. Ltd. Friday, dealers said. Traders will closely track the results during the day.

 

"With such a market where yields are so high, what's the point of participating in OMO," a dealer at a state-owned bank said. "Why would you buy at a loss? Everyone will be thinking on those lines, so we can see weak participation and higher cutoffs (yields at the auction)."    

 

The total turnover in the government securities market at 1050 IST was INR 131.05 billion, up from INR 59.90 billion at 1030 IST Friday, data from Clearing Corp. of India Ltd. showed. Traders will closely track developments in the war in West Asia which could impact crude oil prices and US yields and, in turn, Indian bond prices. The yield on the 10-year gilt is seen in a range of 7.10-7.20% during the day, dealers said.  (Diksha Tripathy)

---

India Gilts: Seen dn as Brent, US ylds inch higher; OMO result may lend cues

 

MUMBAI – Government bond prices are seen opening lower, tracking a rise in Brent crude oil prices and US Treasury yields over the weekend, dealers said. Traders will also track the result of the Resevre Bank of India's INR-250-billion auction to sell gilts through open market operations Monday.      

 

The yield on the 10-year benchmark 6.94%, 2036 bond is expected to open around 7.13% Monday and move between 7.05% and 7.15% during the day, dealers said. Friday, it ended at INR 98.76, or 7.1194% yield. Traders expect the trading activity in the market to be sluggish ahead of the OMO sales. The INR-250-billion auction Monday marks the final tranche of the INR-1-trillion OMO sales the central bank had announced for September. The central bank has offered to sell the 7.59%, 2029 bond, the 6.45%, 2029 bond, the 7.61%, 2030 bond, the 5.85%, 2030 bond, the 6.54%, 2032 bond, and the 7.26%, 2032 bond at the auction at 0930-1030 IST. The results are likely to lend further cues to the market, dealers said. 

 

The rise in oil prices is likely to weigh on bond prices Monday, dealers said. Brent crude oil futures for November delivery were at $106.54 per barrel at 0800 IST, up from $104.99 at the end of Indian gilt market hours Friday. Oil prices rose amid uncertainty over the prospects of a near-term truce between the US and Iran. US President Donald Trump rejected Iran's latest proposal to re-open the Strait of Hormuz, although he expected negotiations to restart this week, Axios reported. Iran had reiterated over the weekend that it would reopen the Strait of Hormuz within seven days but said it would not compromise on its conditions. Traders will closely watch any developments in the war as it could lend direction to the market during the day. 

 

A rise in US yields to multi-year highs is also likely to put pressure on bond prices, dealers said. The yield on the 10-year US benchmark 6.94%, 2036 bond rose to 5.21% at 0800 IST, up from 5.18% at 1700 IST Friday. The yield on 30-year US Treasuries rose slightly to 5.5185%, close to its highest level since 2004, after gaining 27 basis points this month. Two-year yields have risen 55 basis points this month as markets increased bets on additional Federal Reserve rate hikes. Expectations of further rate hikes are likely to keep US yields up, which in turn is likely to impact Indian bond prices. The yield on the 10-year 2036 bond may even breach the 7.14% level, which is its highest so far in the current financial year, dealers said. 

 

The government's borrowing calendar for Oct-Mar, released after market hours Friday, is unlikely to have a significant impact on gilt prices as it was largely on the expected lines, dealers said. The major takeaway from the release of the borrowing calendar was that the government had refrained from additional borrowing and the plan would be non-disruptive to the market, dealers said. At the same time, it allowed the RBI to continue selling short-term gilts via open market operations should the central bank choose to extend its auctions from September into October. The cut in the share of the 10-year bond's supply may help it outperform peers Monday, they said. 

 

In line with market feedback, the government has raised the share of the seven- and 15-year securities in the calendar and reduced the share of bonds maturing up to five years due to the hefty redemptions already lined up in those tenures. The seven-year bond will make up 9.1% of the Oct-Mar calendar from 8.1% in Apr-Sept, while the 15-year bond will make up 17.6% of the issuance. This is the largest sequential increase, from 14.5% in the first half of the financial year.

 

The spread of the 15-year benchmark 7.06%, 2041 gilt over the 10-year benchmark 6.94%, 2036 gilt may rise to near 30 basis points from 16 bps Friday. The spread of longer-term bonds is also likely to increase, dealers said. Meanwhile, short-term gilts are unlikely to benefit from the reduction in the share of their supply as traders would fear upcoming OMO sales and rate hikes, at least until the next rate decision on Oct. 7, they said.  (Diksha Tripathy)

 

End

 

US$1 = INR 95.98

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

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.