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Informist, Friday, Nov. 7, 2025

 

By Aaryan Khanna

 

NEW DELHI – Government bond prices ended on a mixed note. The two most-traded bonds maturing in 10 years were little changed from the previous close as the fresh supply of the 6.48%, 2035 gilt sailed through at auction. The 6.68%, 2040 gilt ended marginally lower as traders speculated that the Reserve Bank of India was not buying bonds in the secondary market, unlike earlier this week, dealers said.

 

The most-traded 6.33%, 2035 gilt ended at INR 98.71, or 6.51% yield, almost flat against Thursday's close. The on-the-run 10-year 6.48%, 2035 gilt closed at INR 100.08, or 6.47% yield, as against INR 100.12, or 6.46% yield, in the previous session. The bond may become the 10-year benchmark next week as its volumes are likely to improve after the fresh supply, dealers said. It was the second most-traded gilt on Friday, and the auction will double its outstanding to INR 640 billion on Monday. 

 

The auction result was largely on expected lines, though the cut-off price on the 2035 gilt at INR 99.98 was a tad below the INR 100.00 median estimate in an Informist poll. Its price fell after the auction result to a low of INR 100.01, the weighted average price at the auction, before recovering by the close of trade. The bond got widespread demand, including from traders preparing to add it to their portfolios as it becomes the 10-year benchmark, dealers said.  

 

"The fact that there is no pain from a full INR-320-billion auction is still a positive," a dealer at a state-owned bank said. "The result was fine, there was no surprise there and that's why the market didn't react much." Trade volumes fell from the previous day despite the auction, which usually triggers a frenzy of trading activity as primary dealers distribute bonds to clients after the results are announced.

 

Bond prices rose in early trade after data released post-market hours Thursday showed that 'others', a category that includes the RBI, bought a large quantum of bonds for the third straight session. Clearing Corp. of India showed net buying by 'others' – which includes the central bank, provident funds and insurers – soared to INR 142 billion between Monday and Thursday.

 

This is the best three-session stretch from the 'others' since late January, when the RBI last bought gilts in significant amounts in the secondary market, infusing durable liquidity. Kotak Mahindra Bank was the latest to say that the RBI may conduct open market operations worth up to INR 1 trillion to infuse durable liquidity into the banking system.

 

Traders also said that neither insurers nor provident funds had been active on the buying side in such large quantities this week, and had denied that the purchases were from them, dealers said. The data on the RBI's activity in the bond market this week will be released only on Nov. 13. Expectations of central bank intervention to cap yields had risen after the RBI rejected all bids for INR 110 billion of the 6.28%, 2032 gilt at auction last week, helping reverse the 6.33%, 2035 gilt's yield down from the crucial 6.60% mark.

 

However, these purchases were not seen Friday, dealers said. This weighed on the 15-year benchmark bond, the best performer so far this week amid speculation about the RBI's bond buying, with traders avoiding driving up prices in the 2035 bonds before the auction. Dealers also speculated the RBI was directly buying the 6.68%, 2040 gilt in the secondary market – the bond's trade volumes had shot up this week, but fell to a little over half of Thursday's volumes on Friday. Traders also trimmed their stock of the longer-term bonds to reduce risk in their portfolios ahead of the weekend, dealers said.

 

"I think it was a mix of profit taking and because the sense is that he (RBI) is not in the market today (Friday)," a dealer at a private-sector bank said. "But maybe there will be some momentum in the market now, and CPI is coming next week, so I think we are in a good position to see yields slightly fall from here." India's CPI data for October is scheduled for release at 1600 IST on Wednesday and traders expect retail inflation to cool to below 1%, the lowest reading in the current series with base year 2012. 

 

Turnover in the gilts market was INR 439.15 billion, down from INR 516.80 billion Thursday, 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 Friday, against one trade worth INR 100 million on Thursday.

 

OUTLOOK

Gilts are not traded on Saturdays. On Monday, government bond prices may open steady amid a lack of significant domestic cues and track the movement in US Treasury yields over the weekend, dealers said. Further net purchases by the 'Others' category could continue to stoke hopes of the RBI buying bonds in the secondary market at a consistent pace for the first time since January.

 

Bonds maturing in up to 15 years are seen as the target of these purchases and will be preferred by traders, dealers said. Net secondary market purchases from the 'others' segment, which includes the RBI, have totalled INR 142 billion between Monday and Thursday, the best three-day stretch for the category since late January, when the central bank had last bought gilts in sizeable amounts in the secondary market. 

 

Traders remain uncertain whether the RBI's Monetary Policy Committee will cut the repo rate in December. At the same time, confidence in demand matching supply and the government's fiscal strength has increased after the RBI accepted only bids worth only INR 210 billion against the notified INR 320 billion at last week's gilt auction, dealers said. Traders continue to expect the RBI to soon conduct auctions to buy gilts, though estimates on the timing of such action vary.

 

Dealers are also tracking developments in talks between India and the US for a trade deal. Progress in the talks may weigh on gilt prices, but any reports of a delay in the final announcement of the deal may aid bonds, dealers said. US President Donald Trump said last week he was ready for a trade deal with India.

 

Movement in crude oil prices and the rupee may also influence gilts. The yield on the 6.33%, 2035 bond is seen at 6.47-6.55%. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.43-6.50% Monday.

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.33%, 2035	98.7100	6.5142%	98.7050	6.5150%
6.48%, 2035	100.0800	6.4678%	100.1200	6.4624%
6.01%, 2030	99.3975	6.1570%	99.4000	6.1561%
6.68%, 2040	98.2800	6.8666%	98.4025	6.8530%
6.90%, 2065	94.6800	7.3128%	94.6000	7.3194%

 

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India Gilts: Most down; 15-yr dn more as traders trim duration before weekend

 

	1526 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.67	98.83	98.65	98.83	98.71
YTM (%)	6.5200	6.4977	6.5233	6.4977	6.5150

 

	1526 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.04	100.15	100.02	100.15	100.12
YTM (%)	6.4734	6.4585	6.4761	6.4585	6.4624

 

MUMBAI--1526 IST--Most government bonds were down as traders sold gilts after absorbing supply of INR 320 billion of the 6.48%, 2035 gilt at auction, dealers said. The 15-year benchmark 6.68%, 2040 gilt was down more than most bonds as traders sold the bond after prices rose in the past two sessions, they said. 

 

Demand from banks was firm for the 6.48%, 2035 bond, dealers said. Some foreign portfolio investors and foreign banks also picked up the bond. Some insurers and mutual funds also likely bid for the bond at auction but did not get stock at the auction as they bid at lower prices, dealers said. The cut-off price on the 2035 bond at the auction was slightly lower, but the weighted average price of the 2035 bond at the auction was INR 100.01, which was within view, and limited the fall in prices in the secondary market, dealers said.

 

"We were expecting figure 04 (INR 100.04), but then everyone was saying a tail will come, it'll come below 99 (INR 99.99). So, we said figure 01, figure 02 (INR 100.01-100.02)," a dealer at a state-owned bank said. "PSUs bid at the same levels and foreign banks were also telling the same."

 

Traders also sold bonds to trim their positions ahead of the weekend, dealers said. Traders speculated that the Reserve Bank of India was not buying gilts in the secondary market Friday, after likely purchasing gilts the entire week so far, which also led to a fall in gilts, they said. The fall in the 15-year gilt was more pronounced than the others as traders trimmed thier exposure in longer duration bonds, dealers said. 

 

Some traders expect RBI's Bulletin Weekly Statistical Supplement data for the week ended Oct. 31, which is due to be released Friday, to show some gilt buys by the central bank. Traders will also await any net gilt buys by the 'others' segment – which includes insurance companies, provident funds and the central bank – to guage whether the RBI was buying gilts Friday. 

 

At 1526 IST, the turnover in the gilt market was INR 304.15 billion, lower than INR 443.35 billion at 1530 IST Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.33%, 2035 benchmark bond is seen moving in a range of 6.48-6.55% during the day, while that on the 6.48%, 2035 bond is seen at 6.43-6.49%.  (Srijita Bose)

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India Gilts: Mixed; most down as demand for 6.48%, 2035 bond seen shaky

 

	1225 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.70	98.83	98.65	98.83	98.71
YTM (%)	6.5157	6.4977	6.5233	6.4977	6.5150

 

	1225 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.08	100.15	100.04	100.15	100.12
YTM (%)	6.4685	6.4585	6.4741	6.4585	6.4624

 

MUMBAI--1225 IST--Prices of government bonds were mixed and most bonds remained down as traders made room for the fresh supply, awaiting the result of the INR-320-billion auction of the 6.48%, 2035 bond. Demand for the 2035 bond at the auction is seen mixed with several traders not wanting to purchase bonds aggressively. Volume was thin and traders speculated that the central bank was not purchasing gilts on-screen Friday, which disappointed some who were expecting bond prices to rise before the auction. 

 

"People are stuck because they had bought it (the 6.48%, 2035 bond) at 10-12 paisa (INR 100.10-INR 100.12), so why would they want to buy, and it is such a large supply (of INR 320 billion)," a dealer at a state-owned bank said. "The maturity (of 10-years) is there (a good reason to buy) but I don't think that alone is enough." 

 

Demand at the auction is seen mixed across segments with some state-owned banks bidding for the 2035 bond at prices lower than current market levels, after purchasing the bond at yields lower than other 10-year bonds at the time of its first auction. Traders usually prefer 10-year bonds for held-for-trading books, but due to uncertainty on further rate cuts and lack of appetite from investors, traders did not want to build heavy positions in these books, which reduced demand for Friday's auction paper, dealers said. Several traders, especially from state-owned banks, were already sitting on excess statutory liquidity ratio securities and did not want to hold more stock. Some private sector banks and mutual funds were interested in the paper, dealers said.

 

"We're going for it (the 6.48%, 2035 bond)," a dealer at a private sector bank said. "This paper hasn't been moving with other papers. Its price hasn't risen like how the 6.33% (2035 bond) has, its been underperforming so its good to buy."

 

An Informist poll estimated the cut-off price on the bond at INR 100.00. If the cut-off price is below this, bond prices could fall, but losses would be limited due to buying interest if the 6.33%, 2035 bond yield hits the key 6.55% level. If the cut-off price is higher than expectations, the 6.33%, 2035 bond yield could fall below 6.50%, but traders were uncertain whether it would sustain the yield fall. Traders speculated that central bank was not purchasing gilts onscreen Friday, after likely purchasing gilts the entire week so far, dealers said. The central bank is likely to have picked up gilts maturing within five to 15 years this week, which had pushed up volumes, dealers said. If there are no indications of the central bank purchasing bonds during the day, bond prices could fall further, dealers said. 

Traders preferred gilts maturing in upto 10 years, and some preferred three-year and four-year papers. The 15-year 6.68%, 2040 bond was sharply down after traders purchased the gilt earlier this week as its yield spread over the 10-year benchmark bond was seen lucrative. Speculation of lack of support from the central bank during the day weighed on the bond, dealers said. 

 

At 1225 IST, the turnover in the gilt market was INR 131.75 billion, lower than INR 243.65 billion at 1230 IST Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.33%, 2035 benchmark bond is seen moving in a range of 6.48-6.55% during the day, while that on the 6.48%, 2035 bond is seen at 6.43-6.49%. (Cassandra Carvalho)

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India Gilts: Tad down ahead of fresh supply; up earlier on hope of RBI buys

 

	0941 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.69	98.83	98.67	98.83	98.71
YTM (%)	6.5171	6.4977	6.5197	6.4977	6.5150

 

	0941 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.08	100.15	100.08	100.15	100.12
YTM (%)	6.4675	6.4585	6.4685	6.4585	6.4624

 

MUMBAI--0941 IST--Government bond prices fell slightly Friday, reversing early gains, as traders made room for INR 320 billion of fresh supply at the weekly gilt auction, dealers said. Prices were up at market open on hope of the Reserve Bank of India buying gilts in the secondary market as the 'others' segment of the market participants--which includes insurance companies, provident funds and the central bank--was the largest net buyer of gilts for the third consecutive session Thursday, according to data from Clearing Corp. of India. Demand for the 6.48%, 2035 gilt at auction is seen firm, dealers said, but the cut-off price is seen lower than the bond's current market price. The government will sell INR 320 billion of the 6.48%, 2035 bond at the auction Friday.

 

The 6.33%, 2035 bond yield has fallen to near 6.50% this week, from a high of 6.60% on Oct. 31, on hope of the RBI purchasing gilts either on-screen or through auctions to limit a sharp fall in gilt prices. Traders continued to speculate that the RBI is supporting the gilt market by conducting open-market bond purchases in the secondary market. Data from Clearing Corp. of India showed that 'others' – a category that includes the central bank, provident funds and insurers – bought INR 52 billion worth of gilts in the secondary market Thursday. In total, the 'others' category has net bought INR 142 billion worth of gilts so far this week. 

 

"Everything depends on the auction cut-off...the levels will hold for now till the auction," a dealer at a state-owned bank said. "It is difficult to expect a range, but it will definitely be at tail (lower price than current market levels)."

Some traders said the cut-off yield on the 2035 bond at auction is likely to be higher than the current market level due to its large supply. Demand from state-owned banks for the bond is seen firm. Mutual funds are also likely to participate at the auction, dealers said. Long-term investors, such as insurers and pension funds, may refrain from buying the 10-year bond at auction. Trade volume is likely to remain thin until the auction result, as traders are likely to wait for the cut-off for further direction on the movement of bond prices.

 

At 0934 IST, the turnover in the gilt market was INR 43.30 billion, lower than INR 79.20 billion at the same time Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.33%, 2035 benchmark bond is seen moving in a range of 6.48-6.55% during the day, while that on the 6.48%, 2035 bond is seen at 6.43-6.49%. (Janwee Prajapati)

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India Gilts: Seen opening steady amid caution before INR-320-bln bond auction

 

MUMBAI – Government bond prices are seen opening steady amid caution ahead of the INR-320-billion gilt auction Friday, dealers said. Prices may rise during the day due to an overnight fall in US Treasury yields, but market participants may wait for the results of the auction to take cues, they said. 

 

The yield on the 10-year benchmark 6.33%, 2035 gilt is seen moving in a range of 6.48-6.56% during the day. On Thursday, the 2035 gilt ended at INR 98.71, or 6.52% yield. The 10-year 6.48%, 2035 bond is expected to move in a range of 6.43-6.50%. On Thursday, it ended at INR 100.12, or 6.46% yield.

 

The government will sell the 6.48%, 2035 bond at auction Friday. Demand for the bond is expected to be firm from across market segments, dealers said. However, some dealers were of the opinion traders could demand a higher yield for the bond at auction due to the persisting uncertainty around domestic rate trajectory. Trade volumes could be thin before the auction results and prices could move later in the day after taking cues from the auction results, dealers said. 

 

Traders continued to speculate that the Reserve Bank of India would support the gilts market by conducting open-market operations to buy bonds in the secondary market. Data from Clearing Corp. of India showed that 'others' – a category that includes the central bank, provident funds and insurers – bought INR 52 billion worth of gilts in the secondary market Thursday. In total, the 'others' category has net bought INR 142 billion worth of gilts so far this week. Some traders speculate that RBI could buy the 10-year bond at Friday's auction to support prices. This may lead to a rise in bond prices during the day, dealers said. 

 

The 10-year US Treasury yields fell to 4.10% at 0836 IST from 4.15% at 1700 IST, Thursday. Federal Reserve Governor Stephen Miran late Thursday said he expects the US Federal Open Market Committee to cut interest rates at its December meeting, despite the number of non-voting policymakers who may not want to. Market participants are finding it difficult to gauge the interest rate trajectory of the US central bank, as various Fed officials remain divided about the next rate cut decision. Traders may also take cues from the movement in rupee against the dollar Friday.  (Srijita Bose)

End

 

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

 

Edited by Saji George Titus

 

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