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Informist, Wednesday, Sept. 30, 2026

 

By Janwee Prajapati

 

MUMBAI – Government bond prices ended sharply lower Wednesday, tracking an intraday rise in Brent crude oil futures prices near the end of the trading session, dealers said. The rise in US Treasury yields also weighed on bond prices, dealers said. Some traders likely booked profits at attractive levels, while some other made space in their portfolios for the fresh supply of gilt at the weekly gilt auction Thursday, dealers said. Both the underwriting auction and the weekly debt sale will be on Thursday as financial markets are shut on Friday for Gandhi Jayanti.

 

The benchmark 10-year bond ended at INR 98.29, down from INR 98.46 Tuesday. Its yield rose to 7.1879% from 7.1628% at the end of the previous session. The bond's yield rose as traders who bought near the 7.20% mark booked profits, dealers said. Some traders, however, covered their short positions, which limited the fall, dealers said. The yield on the 6.94%, 2036 bond moved between 7.1364% and 7.1905%. "The yield on the 10-year benchmark bond is not sustaining a rise above 7.19%," a dealer at a private sector bank said. "The 7.18% mark is a crucial level for the market. If 7.20% is broken, we will see 7.25% soon, but I do not think it will happen till MPC (Reserve Bank of India's Monetary Policy Committee), if Brent remains at these levels."  

 

During Wednesday's Indian trading session, Brent crude futures for December delivery were at $97.81 per barrel, up from $96.50 at 0900 IST and $96.77 at the close of Indian trading hours on Tuesday. At 1700 IST, oil futures for November delivery were at $103.22 per barrel, down from $104.27 at the same time on Tuesday.

 

While crude oil price movements are critical for bond prices, domestic bonds also closely tracked US Treasury yields since the Federal Open Market Committee hiked rates at its policy meeting in mid-September, triggering a surge in US yields. The yield on the 10-year benchmark US Treasury note was at 5.24%, up from the day's low of 5.21% and 5.22% at the end of Indian trading hours on Tuesday.

 

The rise in US Treasury yields, along with higher crude oil prices, fuelled expectations of a repo rate hike by the Reserve Bank of India's Monetary Policy Committee at its meeting next week, keeping market participants cautious, dealers said.  

 

"It's a traders' market. Bond prices are tracking crude prices," a dealer at a small financial bank said. "People (traders) must have covered their shorts (short bets) when Brent (crude oil prices) had fallen... some likely bought on the dip too (bought bonds when the bond prices fell to the day's low)."

 

The results of the INR 240 billion Treasury bill auction also weighed on bond prices, dealers said. While some traders said they had expected a higher cut-off yield at the auction, others said it signalled that the central bank is comfortable with a higher yield. The central bank set a cut-off yield of 5.5199%, 5.9601% and 6.1798% on the 91-day T-bill, 182-day T-bill and 364-day T-bill, respectively. The cut-off yields set on the 182-day and 364-day T-bills were the highest since April 2025. 

 

Mutual funds likely refrained from buying T-bills aggressively due to month-end redemptions, dealers said. Banks and primary dealers likely bought the 364-day and 182-day T-bills, dealers said. Insurance companies also likely picked up the 91-day T-bill, dealers said. 

 

Some traders likely made space in their portfolios for the fresh supply of gilts ahead of Thursday's auction, which also weighed on bond prices, dealers said. Some traders said the auction cut-off could be near secondary market levels, though crude oil price movements will be critical. The government will sell INR 330 billion of four gilts on Thursday, it said in a release Monday.

 

The total turnover in the government securities market was INR 486.05 billion on Wednesday, down from INR 514.50 billion on Tuesday, data from Clearing Corp. of India showed.      

 

OUTLOOK

On Thursday, bond prices may take cues from developments in the war in West Asia and their impact on crude oil prices and US Treasury yields. Any escalation in the war will significantly impact bond prices, dealers said. Traders are expected to stay on the sidelines ahead of the RBI's Oct. 5–7 Monetary Policy Committee meeting, dealers said. Some traders are likely to make space in their portfolios for the fresh supply of gilts at the weekly gilt auction Thursday. Later in the day, the auction result is likely to lend cues to the bond prices, dealers said. Money markets will be shut on Friday on account of Gandhi Jayanti. 

 

The government said it will sell INR 90 billion of the 6.20%, 2029 bond, INR 120 billion of the 6.57%, 2033 bond, INR 90 billion of the 7.63%, 2056 bond and INR 30 billion of the 7.50%, 2056 sovereign green bond. Some traders said the cut-off could be near secondary market levels, though the movement in crude oil prices will be critical. 

 

US private sector job creation picked up in September after a brief slowdown, indicating further stabilisation in the labour market, according to an ADP report on Wednesday. The payroll processing firm said company payrolls rose by 90,000 during the month, higher than the downwardly revised 36,000 in August and above the Dow Jones consensus estimate of 68,000.

 

The official US September employment report from the Bureau of Labor Statistics is scheduled for release on Friday. 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.

 

Traders also expect the release of the state borrowing calendar for the December quarter on Friday, with borrowing quantum likely to be between INR 2.7 trillion and INR 3.3 trillion, dealers said. Traders also expect the RBI to announce an open market operation to sell bonds and absorb liquidity from the banking system. Such an announcement is expected towards the end of this week, ahead of the RBI's MPC meeting next week, which will likely keep traders cautious, 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 7.10% and 7.25%, dealers said.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	98.2900	7.1879%	98.4600	7.1628%
6.48%, 2035	95.5000	7.1661%	95.5975	7.1506%
6.36%, 2031	98.0100	6.8919%	98.1500	6.8537%
7.06%, 2041	97.1000	7.3835%	97.3700	7.3526%
7.24%, 2055	94.8000	7.6898%	95.0600	7.6663%

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India Gilts: Reverse all gains as oil prices rise, T-bill cut-off ylds weigh

 

	1603 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	98.44	98.64	98.42	98.54	98.46
YTM (%)	7.1665	7.1364	7.1688	7.1511	7.1628

 

MUMBAI-–1603 IST--Government bond prices gave up all gains and traded slightly lower, tracking an intraday rise in Brent crude oil futures, dealers said. Higher-than-expected cut-off yield set on Treasury bills also weighed on bond prices, dealers said. Traders remain cautious of placing aggressive bets ahead of the meeting of the Reserve Bank of India's Monetary Policy Committee next week, dealers said.

 

"Though there were no surprises at the (T-bill) auction, but still the cut-off was not as good as expected," a dealer at a primary dealership said. "The cut-off on-year T-bill was higher largely due to the rise in overnight indexed swap rates which is also trading near similar levels." The one-year OIS rate was trading at 6.20% at 1603 IST. At the INR 240 billion worth of T-bill auction, the central bank set a cut-off yield of 5.5199%, 5.9601% and 6.1798% on the 91-day T-bill, 182-day T-bill and 364-day T-bill, respectively. The cut-off yield set on the 182-day and 364-day T-bills was the highest since April 2025. 

 

Mutual funds are likely to have refrained from picking up T-bills aggressively due to month-end redemptions, dealers said. Banks and primary dealers likely bought the 364-day and 182-day T-bills, dealers said. Insurance companies also likely picked up the 91-day T-bill, dealers said. 

 

Brent crude oil futures for November delivery were near $103.34 per barrel, up from the day's low of $101.92 per barrel but lower than $104.27 per barrel at the end of Indian trading hours Tuesday. The yield on the 10-year benchmark US Treasury rose to 5.23% from the day's low of 5.21%, which also weighed on bond prices, dealers said.  

 

Traders refrained from placing aggressive trades as they awaited the result of RBI's October MPC meeting. Some traders also await the release of the state borrowing calendar, which is expected to be released this week, dealers said. The total turnover in the government securities market at 1603 IST was INR 401.50 billion, up from INR 336.55 billion at 1530 IST Tuesday, 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% for the rest of the day, dealers said.  (Janwee Prajapati)

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India Gilts: Rise more as Brent falls; T-bill auction demand seen weak

 

	1215 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	98.58	98.61	98.49	98.54	98.46
YTM (%)	7.1449	7.1408	7.1588	7.1511	7.1628

 

MUMBAI-–1215 IST--Government bond prices rose more as Brent crude oil prices fell below $103 per barrel during the day, dealers said. A consequent intraday ease in US Treasury yields also supported the rise in Indian bond prices, dealers said. However, profit-taking near 7.14% yield on the 10-year benchmark 6.94%, 2036 gilt weighed on bond prices, dealers added.  

 

Traders now await the result of the Treasury bills auction which may lend cues to the market, they said. The Reserve Bank of India had invited bids earlier in the day to raise INR 240 billion through the sale of 91-day, 182-day, and 364-day T-bills. Demand at the auction was likely weak Wednesday, dealers said. Mutual funds likely refrained from placing aggressive bets at the auction amid month-end redemption pressure, they said.

 

Market view on the cut-off yield on the 364-day paper remained mixed. While most expect it to be higher than 6.09% set by the RBI last week, a few others said it may come in at similar levels. The cut-off on the 364-day T-bill at the auction is seen at INR 94.2213, or 6.15%, according to an Informist Poll. 

 

"As far as the cutoffs (yields) are concerned, some tail is expected today (Wednesday)," a dealer at state-owned bank said. "It's month end also, so participation from mutual funds was weak only."

 

Wednesday, global cues supported Indian bond prices, dealers said. Brent crude oil futures for November delivery slipped to $102.68 per barrel at 1200 IST from $103.43 per barrel at 0900 IST. The yield on the 10-year benchmark US Treasury note ticked down to 5.23% at 1200 IST from 5.24% at 0900 IST.

 

The impact of lower US yields and crude oil prices on bond prices was negated by profit-taking by traders. Market participants likely took profits when the yield on the 10-year benchmark 2036 paper fell to 7.14%, dealers said. Most traders maintained caution ahead of the RBI's Monetary Policy Committee meeting next week. Traders will closely track any announcements on liquidity or special measures apart from the key policy rate, they said. 

 

The total turnover in the government securities market at 1215 IST was INR 160 billion, down from INR 178.45 billion at 1230 IST Tuesday, data from Clearing Corp. of India Ltd. showed. During the day, 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% for the rest of the day, dealers said.  (Diksha Tripathy)

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India Gilts: Up as oil falls on easing supply concerns; profit-taking weighs

 

	0945 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	98.53	98.58	98.49	98.54	98.46
YTM (%)	7.1533	7.1452	7.1588	7.1511	7.1628

 

MUMBAI--0945 IST--Government bond prices rose Wednesday on the back of a fall in Brent crude oil prices amid easing supply concerns, dealers said. However, some traders likely booked profits near 7.15% yield on the 10-year benchmark 6.94%, 2036 bond, which capped gains on bond prices. 

 

The 10-year benchmark bond opened at INR 98.54, or 7.1511%, Wednesday and rose up to INR 98.58. However, profit taking by some traders, who had bought bonds when the yield on the 10-year 2036 gilt went up to 7.19?rlier, weighed on prices. The total turnover in the government securities market at 0945 IST was INR 49.05 billion, up from INR 17.80 billion at 0930 IST Tuesday, data from Clearing Corp. of India Ltd. showed.

 

Bond prices were supported as Brent crude oil futures traded below the key level of $105 per barrel, dealers said. Brent crude oil futures for November delivery were at $103.17 per barrel, down from $104.21 per barrel at the end of Indian gilt market hours Tuesday. Oil prices fell after Saudi Arabia reportedly restored about half the capacity of its East-West pipeline following drone attacks, according to a Bloomberg report.

 

The yield on the 10-year US Treasury note also traded below the psychologically crucial level of 5.25% which helped Indian bond prices, dealers said. The expectation of a rate hike by the US Federal Reserve faded as Federal Reserve Bank of New York President John Williams said the Fed has time to assess incoming data before deciding when to raise interest rates again. Following the comments, traders appeared to reduce their expectations of a rate hike at the Fed's next meeting, with futures pricing in a near 52% chance compared with 70?ay earlier.

 

"Some positive momentum with crude falling below $105 (per barrel) and UST (US yields) remaining below 5.25% (yield on the 10-year benchmark US Treasury note)," a dealer at a private-sector bank said. "There is slight profit-taking, but mostly people are waiting for the MPC now."  

 

Back home, traders maintained some caution ahead of the Reserve Bank of India's Monetary Policy Committee meeting next week. Traders will closely track any announcements on liquidity or special measures apart from the key policy rate, they said. 

 

Wednesday, 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)

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India Gilts: Seen up as Brent below $105/bbl; caution likely before MPC meet

 

MUMBAI – Government bond prices are seen opening higher, tracking an overnight fall in Brent crude oil prices amid easing supply pressures, dealers said. However, traders are likely to refrain from placing aggressive bets in the market as they are likely to maintain caution ahead of the Reserve Bank of India's Monetary Policy Committee meeting next week.

 

The yield on the 10-year benchmark 6.94%, 2036 bond is expected to open around 7.15% and move between 7.10% and 7.20% during the day, dealers said. Tuesday, it ended at INR 98.46, or a yield of 7.1628%. Some traders are likely to book profit if the bond prices rise, which may put pressure on prices, dealers said. The uncertainty around the end of the US-Iran war is likely to keep traders on the sidelines, they said. However, a further ease in oil prices during the day may support bond prices, dealers said. 

 

Oil prices fell overnight amid easing supply concerns after Saudi Arabia reportedly restored about half the capacity of its East-West pipeline following drone attacks, according to a Bloomberg report. Brent crude oil futures for November delivery were at $103 per barrel at 0815 IST, down from $104.21 per barrel at the end of Indian gilt market hours Tuesday. However, uncertainty remains, with markets looking for clearer signs of progress in the US-Iran negotiations following several conflicting signals in recent days.

 

Bond prices are likely to track movement of US Treasury yields as well, dealers said. The yield on the 10-year benchmark US Treasury note remained below the key level of 5.25%. At 0815 IST, it was at 5.23%, slightly up from 5.22% at 1700 IST Tuesday. Investors also await the release of August's Personal Consumption Expenditures index Wednesday, a key inflation gauge closely watched by the US Federal Reserve, followed by September's nonfarm payrolls report on Friday.

 

Markets also assessed comments from Federal Reserve officials. Federal Reserve Bank of New York President John Williams said the Fed has time to assess incoming data before deciding when to raise interest rates again, while Fed Governor Michael Barr renewed his case on Tuesday for further rate hikes. Following the comments, traders appeared to reduce their expectations of a rate hike at the Fed's next meeting, with futures pricing in a near 52% chance compared with 70?ay earlier.

 

Back home, traders expect a rate hike by the MPC next week. Traders are expected to stay on the sidelines ahead of the MPC's Oct. 5–7 meeting, dealers said. This is likely to weigh on the trade volume of the secondary market this week, dealers said. 

 

Wednesday, dealers may also assess the RBI panel's proposal to raise the ways and means limit for state governments, which is likely to be mildly supportive for the bond market as it gives states greater flexibility to manage temporary cash-flow mismatches and could reduce the need for abrupt market borrowing, they said. The higher limit may help ease concern around state bond auction supply, particularly if states use the additional headroom to smoothen their borrowing schedules. However, the impact on gilts is expected to be limited as the advancement in limit is intended for short-term cash management and does not reduce states' underlying borrowing requirements.  

 

Bond prices may also take cues from the result of the Treasury bills auction Wednesday, dealers said. The RBI will auction 91-day Treasury bills worth INR 90 billion Wednesday. The central bank will also auction INR 80 billion of 182-day T-bills and INR 70 billion of 364-day T-bills. A higher-than-expected cut-off yield on T-bills at the auction may weigh on bond prices, dealers said.  (Diksha Tripathy)

 

End

 

US$1 = INR 95.83

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

 

Edited by Saji George Titus

 

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