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Informist, Monday, Oct. 13, 2025

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds were little changed Monday after India's CPI inflation fell to an over eight-year low of 1.54% in September, in line with traders' estimates and an Informist poll median estimate. Traders held on to bets of a rate cut of 25 basis points by the Reserve Bank of India's Monetary Policy Committee at its meeting in December after the CPI data, though most traders said CPI was not being tracked as actively as the focus shifted to growth, for cues on further rate cuts. Bond prices ended higher across most tenures Monday, and long-term bonds were up the most. 

 

The 10-year benchmark 6.33%, 2035 gilt closed at INR 98.66, or a yield of 6.52%, against INR 98.54, or 6.54% yield, Friday. The newly issued 6.48%, 2035 bond ended at INR 100.22 or 6.45% yield, against INR 100.13 or 6.46% Friday. The 6.90%, 2065 bond ended at INR 97.05, 32 paise higher from Friday's close and at a yield of 7.12%. 

India's September CPI inflation print was the lowest since June 2017. Core inflation remained above the RBI's comfort zone at 4.5%, the highest since September 2023, but traders largely dismissed the number since it was expected. Traders piled on to long-term bonds as the size of the state bond auction Tuesday is smaller than indicated in the Oct-Dec state borrowing calendar. Reduced supply of these tenures in the Centre's Oct-Mar borrowing plan also aided the rise. Insurance companies and pension funds were purchasing long-term gilts, dealers said. Traders purchased the 15-year 6.68%, 2040 bond, it was the second-most traded paper on the RBI's Negotiated Dealing System-Order Matching platform, with a turnover of INR 119.70 billion Friday. 

 

"People were expecting these levels only (for Sept. CPI)," a dealer at a state-owned bank said. "Rate cut probability is there. RBI has also said in previous MPC (on Oct. 1) that there is space for policy easing. We think 25 bps rate cut will happen in December."

 

Several traders were waiting for prices to reach current levels in the secondary market, dealers said. The 6.33%, 2035 bond's closing levels were close to that of closing levels on Oct. 1, the day of the outcome of the MPC's October meeting. After the CPI data, traders now await the minutes of the October meeting for further cues on the rate-setting panel's upcoming decisions. 

 

Bond prices opened higher tracking a fall in US Treasury yields over the weekend. The yield on the benchmark 10-year US Treasury note fell to 4.04% at 0900 IST Monday from 4.11% at 1700 IST Friday. A smaller-than-indicated state bond size aided the rise in prices. Traders speculated that states were adopting measures to avoid dumping large supply in the bond market. Heavier-than-indicated state bond supply in Jul-Sept had prevented a downside movement in both state bond and gilt yields.

 

Later in the day, the appreciation in the rupee against the dollar also helped bond prices after reports that the US and India were hopeful of concluding the first tranche of the bilateral trade agreement by November, dealers said. However, selling pressure mounted on the benchmark 10-year gilt as traders sold this paper to pick up longer-term gilts, as well as invest in the newly issued 6.48%, 2035 bond, which will become the next 10-year benchmark bond, dealers said. 

 

"There is selling seen in 10-year but rest all long-term papers are good," a dealer at another state-owned bank said. "The 6.48% (2035) paper is good to keep, if it goes to 48 (6.48%) I will accumulate this paper. If the difference will come to 9-10 basis points (between 6.33%, 2035 and 6.48%, 2035 gilt yield) it's a good idea to short the benchmark and buy 6.48%."

 

Primary dealerships likely sold gilts to make room for bonds ahead of the weekly gilt auction, dealers said. Post-market hours, the RBI said the government will sell INR 180 billion of the 6.01%, 2030 bond and INR 120 billion of the 7.09%, 2074 bond Friday. Short-term bonds, especially the five-year benchmark bond, underperformed Monday due to the fresh supply this week, as well as preference for long-term gilts. Some traders have already priced in a rate cut by the MPC in December and did not have more space for short-term gilts in their books, they said.

 

Turnover in the gilts market was INR 586.45 billion, lower than INR 627.90 billion Friday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. There were no trades using the RBI's wholesale e-rupee pilot Monday, compared with six trades worth INR 300 million conducted Friday.

 

OUTLOOK

On Tuesday, government bonds may take cues from the overnight movement in US Treasury yields at open. Long-term bonds may open higher due to the small state bond auction size. Later in the day, bond prices will track the result of the INR-128-billion auction. According to the indicative calendar for state bond issuance in Oct-Mar, states were to raise INR 291 billion Tuesday.

 

Traders will position ahead of the release of the minutes of the MPC's October meeting, due Wednesday. Later in the week, traders will realign portfolios ahead of the weekly gilt auction Friday. Post-market hours, the RBI said the government will sell INR 180 billion of the 6.01%, 2030 bond and INR 120 billion of the 7.09%, 2074 bond Friday.

 

Geopolitical developments, rupee and crude oil price movements may influence gilts Tuesday. The impact of these offshore triggers may be limited, with traders' focus on domestic monetary policy easing, dealers said. 

 

The rate-setting panel said there was room to ease monetary policy further to support growth. The 2035 bond yield is seen falling up to 6.40?fore the next policy review in December, dealers said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.46-6.55%.

 

	MONDAY		FRIDAY
	PRICE	YIELD	PRICE	YIELD
6.33%, 2035	98.6600	6.5198%	98.5400	6.5370%
6.48%, 2035	100.2200	6.4495%	100.1250	6.4625%
6.01%, 2030	99.3975	6.1549%	99.4400	6.1444%
6.68%, 2040	98.9100	6.7968%	98.7400	6.8153%
6.90%, 2065	97.0500	7.1243%	96.7325	7.1491%

 

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India Gilts: Remain up; Sept CPI in line with view, Dec rate cut bets intact

 

	1615 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.68	98.73	98.56	98.63	98.54
YTM (%)	6.5170	6.5102	6.5338	6.5241	6.5370

 

	1615 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.22	100.25	100.14	100.24	100.13
YTM (%)	6.4495	6.4453	6.4604	6.4467	6.4625

 

India Gilts: Remain up; Sept CPI in line with view, Dec rate cut bets intact

 

NEW DELHI--1615 IST--Government bond prices remained higher after India's CPI inflation for September, which came in at an over eight-year low of 1.54%, was in line with expectations. India's CPI inflation was seen at 1.5% in an Informist poll and dealers had priced in a reading of 1.8% at the upper end of expectations. Traders retained their bets on the Reserve Bank of India's Monetary Policy Committee cutting rates at its next meeting in December.

 

CPI inflation averaged 1.7% in the September quarter, against the RBI's forecast of 1.8%. The central bank has cut its forecast for the December quarter by 130 basis points to 1.8% as well. Traders said the September reading was another point of confidence that inflation was in check, especially as the rate-setting panel itself said in its Sept. 29-Oct. 1 meeting that it had room to ease monetary policy to support growth.

 

"Core (inflation) is slightly on the higher side, but that shouldn't be a problem at all," a dealer at a private-sector bank said. Core CPI inflation rose to a two-year high of 4.5% in September. "The GST (goods and services tax) cuts will bring down core (inflation) most heavily, and a rate cut in December remains very well intact."

 

Bets on further monetary easing are likely to materialise after traders assess the commentary in the minutes of the meeting ended Oct. 1, which will be released Wednesday, dealers said. Some traders booked profits in the 10-year bonds after earlier ramping up their bets on a soft September CPI inflation reading, they said.

 

At 1615 IST, turnover in the gilts market was INR 523.75 billion, slightly lower than INR 572.45 billion at 1630 IST Friday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and on the 6.48%, 2035 bond is seen at 6.42-6.48%.  (Aaryan Khanna)

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India Gilts: Rise ahead of CPI data, seen making case for Dec rate cut

 

	1545 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.72	98.73	98.56	98.63	98.54
YTM (%)	6.5109	6.5102	6.5338	6.5241	6.5370

 

	1545 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.24	100.25	100.14	100.24	100.13
YTM (%)	6.4471	6.4453	6.4604	6.4467	6.4625

 

MUMBAI--1545 IST--Government bond prices rose ahead of the CPI data release for September at 1600 IST, with traders betting on a print in line with expectations that would make a case for the Reserve Bank of India' Monetary Policy Committee to cut the repo rate in December, dealers said. A fall in US Treasury yields and a rise in the rupee against the dollar also helped gilts rise from lows hit earlier in the day.

 

CPI inflation is expected to have cooled to an over eight-year low of 1.5% in September, according to an Informist poll. With downward pressure on inflation from the rejig in goods and services tax rates in late September, the December quarter CPI inflation print is also expected to be benign, and give an impetus to the MPC to cut the repo rate by 25 basis points at its next meeting, dealers said.

 

Long-term bond prices have been sharply up through the day after the smaller-than-indicated state bond auction. Traders added gilts maturing in 30-50 years while preferring to add state government bonds with up to seven years' maturity, to capture the most lucrative spread across the state government securities, dealers said.

 

"We are going for longer term bonds, that is where money is being made," a dealer at a private-sector bank said. "The steepness is still there in the curve and both Centre and state bond auctions are looking good for further gains."

 

Traders are increasingly considering the 6.48%, 2035 bond to be the 10-year benchmark and using it to calculate spreads due to its larger than usual trade volumes after only a single auction. Some traders preferred the 15-year benchmark 6.68%, 2040 gilt as the spread over the new 10-year bond is being considered, and at nearly 35 basis points, lucrative.

 

At 1545 IST, turnover in the gilts market was INR 455.85 billion, similar to INR 484.50 billion at 1535 IST Friday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and on the 6.48%, 2035 bond is seen at 6.42-6.48%.  (Janwee Prajapati)

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India Gilts: Off highs as traders book profits; long-term bonds outperform

 

	1254 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.60	98.69	98.56	98.63	98.54
YTM (%)	6.5281	6.5155	6.5338	6.5241	6.5370

 

	1254 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.16	100.25	100.14	100.24	100.13
YTM (%)	6.4577	6.4453	6.4604	6.4467	6.4625

 

MUMBAI--1254 IST--Government bond prices were off highs as traders sold bonds at a profits, dealers said. Caution before the release of the CPI inflation reading for September, due at 1600 IST, also limited purchases by investors, they said. Longer tenure bonds continued to outperform other tenures as states reduced their auction size for Tuesday from the indicative calendar .

 

"There is profit-booking today, and overall volumes are also not much. Maybe, after the CPI print we could see a move depending on how the data comes, " a dealer at a primary dealership said. "There is still some fall left in long-term but it will depend on further state bond borrowing. This (Tuesday's state bond auction size) could just be a one-off."

 

Traders booked profits Monday, after being unable to do so on Friday as the 10-year benchmark 6.33%, 2035 bond ended at 6.54% yield, almost 2 basis points higher than Thursday's close. Traders also sold the 10-year benchmark gilt to pick up longer tenure gilts maturing in 30-40 years, dealers said. A smaller-than-indicated size of state bond auction Tuesday eased supply pressures, with traders buying gilts maturing in 15 years or more on hope that the yield spread on longer tenure bonds will narrow down over the 10-year benchmark gilt yield, they said. 

 

Mutual funds and some foreign portfolio investors likely picked up longer tenure bonds, dealers said. However, demand from long-term investors remained muted Monday, which capped gains in longer tenure bonds, dealers said. Additionally, concerns that states may increase their borrowing in the coming months, as they are usually not prudent with their borrowing, also limited the rise in longer tenure bonds, they said.

 

Traders pinned hopes on a lower CPI inflation print to increase their bets of a rate cut by the Reserve Bank of India's Monetary Policy Committee in December. CPI inflation in India likely fell to 1.5% in September, the lowest since June 2017, according to an Informist poll of economists. Traders refrained from placing aggressive bets ahead of the interest rate cue, they said.  

 

The turnover in the gilt market was INR 177.65 billion at 1230 IST, similar to INR 178.15 billion at the same time Friday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the rest of the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and on the 6.48%, 2035 bond is seen at 6.42-6.48%. (Srijita Bose)

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India Gilts:Up on lower-than-indicated state bond supply; CPI data eyed

 

	1015 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.61	98.69	98.56	98.63	98.54
YTM (%)	6.5270	6.5155	6.5338	6.5241	6.5370

 

	1015 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.19	100.25	100.14	100.24	100.13
YTM (%)	6.4543	6.4453	6.4604	6.4467	6.4625

 

MUMBAI--1015 IST--Government bond prices rose on account of the lower-than-indicated supply of state bonds, dealers said. However, the gains were capped and some bonds were off highs as traders sold the 6.33%, 2035 bond after its yield neared 6.50%, seen as the lower end of the trading range, dealers said. CPI data for September at 1600 IST will give cues to the market as traders are likely to price in the expectation of a rate cut in the December Monetary Policy Committee meeting based on the CPI data. 

 

Eight states will borrow INR 128 billion, lower than the indicated size of INR 291 billion, at the weekly auction Tuesday, the Reserve Bank of India said in a press release after market hours Friday. Traders had trimmed their gilt holdings despite the weekly gilt auction sailing through on caution before the state bond auction announcement.

 

"It's a crucial day, the CPI data will give direction to the market and after the data release, the market may price in the expectation of a rate cut at the next MPC meeting," a dealer at a private-sector bank said.

 

Traders widely expect the rate-setting panel to cut the repo rate from the current 5.50% at its next meeting. However, they were waiting to place bets on the rate cut as there was still some time for the meeting, and another low print would firm up those bets, dealers said. CPI inflation in India likely fell to 1.5% in September, the lowest since June 2017, according to an Informist poll of economists.

 

Long-term bonds continued to outperform the 10-year benchmark gilt after firm investor demand at the auction Friday, dealers said. Traders are also preferring these bonds as the reduction in share of supply in the 30- to 50-year bonds in the Centre's borrowing calendar for Oct-Mar is still playing out, they said, especially with lower state bond supply. However, shorter tenure bonds are expected to perform better later in the day as traders may take positions based on their expectation of the rate cut.

 

The turnover in the gilt market was INR 108.05 billion, higher than INR 70.85 billion at 1030 IST Friday, according to data on the Reserve Bank of India's Negotiated Dealing System-Order Matching platform. During the day, the yield on the 10-year benchmark 6.33%, 2035 gilt is seen at 6.48-6.55% and on the 6.48%, 2035 bond is seen at 6.42-6.48%. (Janwee Prajapati)

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India Gilts: Seen up on smaller-than-indicated state bond auction size

 

MUMBAI - Government bond prices are seen opening higher Monday after the size of the state bond auction, scheduled for Tuesday, turned out to be smaller than indicated, dealers said. The fall in US Treasury yields could also support the rise in gilt prices, dealers said. Later in the day, traders will also look forward to the release of India's CPI data at 1600 IST for further cues on the rate trajectory, they said.

 

The yield on the 6.33%, 2035 gilt is seen moving in a range of 6.45-6.60% during the day. On Friday, the 2035 gilt ended at INR 98.54 or 6.54% yield.

 

In a release after market hours Friday, the Reserve Bank of India said eight states will raise INR 128 billion through bonds Tuesday. According to the indicative calendar for state bond issuance for Oct-Mar, states were to raise INR 291 billion this week. Longer tenure bonds could outperform other tenures as an ease in supply in these tenures is seen contracting the yield spread on these bonds over the 10-year benchmark gilt, dealers said. 

 

CPI inflation in India likely fell to 1.5% in September, the lowest since June 2017, largely because of the statistical effect of a high base and lower food prices, according to an Informist poll of 15 economists. A low reading was already priced into gilts. Traders are pricing in a reading of 1.5-1.8%, but if the print comes above 2%, the 10-year benchmark gilt yield may top 6.57%, dealers said. 

 

Meanwhile, the 10-year US Treasury yield fell to 4.04% at 0818 IST, from 4.11% at 1700 IST Friday. Investors sought safe-haven assets amid US President Donald Trump's threat to impose massive tariffs on Chinese imports. Though the fall in US yields could lead some foreign portfolio investors to buy gilts Monday, However, the uncertainty around tariffs and rates could limit the buying sentiment, dealers said.  (Srijita Bose)

 

End

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

 

Edited by Subhojit Sarkar

 

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