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Informist, Thursday, Nov. 13, 2025

By Aaryan Khanna

NEW DELHI – Government bond prices ended lower Thursday on speculation that the Reserve Bank of India was paring its pace of bond purchases seen over the last 10 days, dealers said. Foreign banks, which were the top net buyers on Wednesday, were seen trimming their gilt holdings as bond prices failed to rise despite the record-low October CPI inflation print. Some traders also made room for the fresh supply of gilts at the INR-280-billion auction Friday, with the 6.90%, 2065 bond falling sharply.

The 10-year benchmark 6.48%, 2035 gilt closed at INR 100.04, or 6.47% yield, against INR 100.14, or 6.46% yield, Wednesday. The most-traded 6.33%, 2035 gilt ended at INR 98.70, or 6.52% yield, against INR 98.84, or 6.50% yield, at the close of the previous session. Trade volumes also fell due to a lack of significant fresh cues for gilt prices following Wednesday's inflation data.

After being the top net buyers of gilts for six consecutive trading sessions till Tuesday, gilt purchases by the 'others' category slowed down with a net buy of INR 13.80 billion Wednesday, according to data from Clearing Corp. of India. This figure is much lower than the segment's daily average purchases of around INR 50 billion from Nov. 3 till Tuesday. With INR 315.10 billion of gilt purchases from the 'others' category already completed, traders said the central bank may slow its speculated purchases on both Thursday and Friday as well.

Traders said they were unable to get a clear handle on the RBI's buying pattern intraday, and there seemed to be little correlation between overall market volumes and the RBI's intervention. The central bank was likely buying the most-traded and erstwhile 10-year benchmark 6.33%, 2035 bond as well as other gilts maturing up to 15 years, dealers speculated.

The 'others' segment includes insurers and provident funds as well as the RBI, though traders attribute a majority of the purchases to the central bank. Some traders were also optimistic that the central bank was still buying gilts at the same clip as earlier, and the net number from 'others' had dipped as investors made room for the fresh supply of gilts, dealers said. 

The government will sell INR 160 billion of the 6.68%, 2040 gilt and INR 120 billion of the 6.90%, 2065 bond. Demand at the auction is seen firm as long as the RBI's gilt purchases continue, dealers said. However, demand from long-term investors is not likely to be robust if data after market hours Thursday indicates a second consecutive day of slowing demand from the central bank, and traders may demand higher yields at auction to absorb the supply. This led some traders to place short bets before the close, dealers said.

"The auction is coming and 'others' buys have fallen," a dealer at a primary dealership said. "So it is not a good situation for a trader to add positions here, the levels are also a bit weak – there is no strong support or resistance since the yields have gone down because of RBI buying, not (from the purchases of) anyone in the market."

Reactions to the CPI release Wednesday continued to be mixed. Some sections of the market were upbeat about a rate cut after retail inflation fell to a record low of 0.25% in October and were keen to buy gilts, betting that the RBI's Monetary Policy Committee would cut the repo rate by 25 basis points in December. CPI inflation has been below the lower end of the RBI's target range of 2-6% in three of the last four months, and below the medium-term target of 4% since February.

However, bond prices did not rise as some traders had expected deflation in October, while others said inflation had bottomed out and was likely to climb higher going forward. Since the inflation print did not cement rate cut views, traders await the Jul-Sept GDP data, due on Nov. 28, for further cues. India's GDP likely grew 7.2% in the September quarter, according to India Ratings and Research.

"Growth should be a much more important trigger for the RBI, at least that is the market's thinking," a dealer at a private-sector bank said. "Anyway, it doesn't look like traders are in the mood to play the rate cut game in gilts – right now supply-demand is positive, and so that is the focus of the market."

As bond prices fell, state-owned banks were likely buyers, picking up the most-traded 6.33%, 2035 gilt near the psychologically crucial 6.52% yield. Dealers said there were no fresh cues in the market to place aggressive bets, and so refrained from taking large positions in the run-up to the auction.

Turnover in the gilts market more than halved to INR 332.60 billion from INR 730.60 billion Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. There were two trades worth INR 100 million using the RBI's wholesale e-rupee pilot on Thursday, after four consecutive sessions of no trades. 

OUTLOOK

On Friday, government bond prices may open lower ahead of the weekly bond auction at 1030-1130 IST. The RBI's announcement of a three-day, variable rate reverse repo auction of INR 1 trillion is likely to push up overnight rates and reduce demand for gilts, dealers said.

Moreover, traders expect poor demand at the auction, with long-term investors keeping to the sidelines and traders now unenthused after the pace of the RBI's speculated gilt buys has slowed. The government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 bond at the auction.

Net secondary market purchases from the 'others' segment, which includes the RBI, totalled INR 315.10 billion between Nov. 3 and Wednesday. 'Others' net bought only INR 9.21 billion worth of gilts on Thursday, according to Clearing Corp. of India data released after market hours. Bonds maturing in up to 15 years were seen as the target of these purchases and may fall sharply on Friday, dealers said.

While several traders expect a rate cut at the monetary policy review in December, some said the MPC may hold off on rate cuts if GDP growth remains robust, as the inflation trajectory is expected to rise in the next few months. India's GDP data for Jul-Sept is scheduled on Nov. 28, a week before the next policy review.

Traders continue to expect the RBI to soon conduct auctions to buy gilts in December to infuse durable liquidity or the latest in the March quarter. The fear of additional bond supply for both the Centre and states has receded amid the muted borrowing from both entities since the beginning of October, dealers said.

Some traders also expect the announcement of an India-US trade deal soon, which may dent bond prices in two ways, they said. The likely reduction in the 50% US tariff on India's exports would increase the growth outlook and weaken the case for a rate cut. At the same time, the rupee might rebound against the dollar, prompting the RBI to buy the greenback to shore up its foreign exchange reserves. The infusion of rupee liquidity this will cause may weaken the case for OMO purchases in December, dealers said.

Movement in US Treasury yields, crude oil prices, and the rupee may also influence gilts. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.46-6.52% Friday. The yield on the 6.33%, 2035 bond is seen at 6.50-6.56%.

India Gilts: Remain dn on short bets before auction; RBI seen absent from mkt

MUMBAI--1556 IST--Prices of government bonds remained lower as the volume and price action of bonds did not indicate significant purchases by the Reserve Bank of India on-screen Thursday, dealers said. Some traders also placed short bets ahead of the weekly gilt auction, which also weighed on bond prices. On Friday, the government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 bond. Most traders are expecting the cut-off yield at the auction of the 2065 bond to be higher than secondary market levels due to lack of buying interest from long-term investors such as pension funds and insurers. The auction of the 15-year paper is expected to sail through, especially due to speculation that the central bank purchased the gilt on-screen earlier this week. 

The trade volume in the secondary market almost halved Thursday. At 1530 IST, the turnover in the gilt market was INR 273.40 billion, sharply lower than INR 526.20 billion at the same time Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform.  

"Nobody is buying, only RBI is buying...everybody else is selling right now," a dealer at a state-owned bank said. "We are now waiting for the (Jul-Sept) GDP, which will be a good cue to know whether there will be a rate cut. CPI data was low enough for a rate cut...but if there is any development in the trade front that might change."

Traders also await Friday's weekly statistical data from the RBI for confirmation that purchases made by 'others' last week were done by the central bank itself. The 'others' segment net purchased gilts worth INR 205.47 billion last week, according to data from Clearing Corp. of India, and traders expect a largely similar figure to show under the RBI's open market operation purchases for last week.  

"If the (OMO statistical data) buys number is below 20 thousand (INR 200 billion), then the yields (on the 6.33%, 2035 bond) might rise till 6.55%," a dealer at a private sector bank said. "But if the number is higher than 20 thousand (INR 200 billion), then the yields might fall till 6.48%." 

The yield on the benchmark 6.48%, 2035 bond is seen moving in a range of 6.45-6.50% for the rest of the day, while that on the 6.33%, 2035 bond is seen at 6.48-6.55%. (Janwee Prajapati)

India Gilts: Down on likely foreign bks' sales; bets of 'others' buys reduce

India Gilts: Down on likely foreign bks' sales; bets of 'others' buys reduce

MUMBAI--1308 IST--Prices of government bonds were down due to likely sales from foreign banks, after they were the largest net buyers in the gilts market Wednesday, dealers said. Foreign banks net purchased gilts worth INR 48.84 billion Wednesday. Traders pared expectations of the Reserve Bank of India purchasing gilts onscreen Thursday and Friday, after the 'others' segment of gilt market participants—which includes the central bank, insurance companies and provident funds- bought INR 13.80 billion worth of gilts Wednesday, according to data from Clearing Corp. of India. This figure is much lower than the segment's daily average purchases of around INR 50 billion from Nov. 3 till Tuesday. Traders still expect the segment to be net buyers of gilts Thursday, but the figure could be smaller than seen earlier this week, dealers said.  

"Whoever had bought in the rally (when bond prices rose this week) had booked profits but took new positions also, these people are way out of the money, their positions are stuck," a dealer at a state-owned bank said. "They are deep out of the money now because that rally did not continue after CPI, which is not what people were expecting."

A record low CPI inflation print in October also failed to lift bond prices, and traders who bought bonds Wednesday betting on a further rise in prices post the release of CPI were stuck with excess positions, dealers said. Some traders were expecting deflation in October, while others said inflation had bottomed out in October and was only likely to climb higher going ahead. While a headline inflation of 0.25% in October was positive for some traders, it did not cement bets of a rate cut by the RBI's Monetary Policy Committee in December. Traders await Jul-Sept GDP data, due on Nov. 28, for further cues. India's GDP likely grew 7.2% in the September quarter, according to India Ratings and Research Pvt. Ltd.

Fresh supply of two bonds maturing in more than 10 years at the weekly gilt auction also weighed on bond prices. The government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 bond Friday. Both tenures are not looked upon favourably by traders, due to lack of indications of more than one 25-basis-point rate cut by the Monetary Policy Committee in the coming months.  

Traders also await Friday's weekly statistical data from the RBI for confirmation that purchases made by 'others' last week was the central bank itself. The 'others' segment net purchased gilts worth INR 205.47 billion last week, and traders expect a largely similar figure to show under the RBI's open market operation purchases for last week.  

Traders will track any developments in the investigation into the car blast in Delhi Monday, after the Centre called the incident an act of terrorism. Any names of foreign groups or countries being involved in the attack will weigh on bond prices, as it will trigger dealers' concerns of retaliation by India, dealers said. 

After US President Donald Trump signed the funding bill to end the longest-ever government shutdown in the US earlier in the day, traders expect the 10-year US Treasury yield to rise in the near-term, especially if the release of fresh economic data post shutdown indicates resilience in the US economy, dealers said.  

At 1330 IST, the turnover in the gilt market was INR 198.35 billion, sharply lower than INR 393.95 billion at the same time Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the benchmark 6.48%, 2035 bond is seen moving in a range of 6.43-6.49% during the day, while that on the 6.33%, 2035 bond is seen at 6.48-6.55%. (Cassandra Carvalho)

India Gilts: Dn on low 'others' buys, profit booking; shorts ahead of auction

India Gilts: Dn on low 'others' buys, profit booking; shorts ahead of auction

MUMBAI--1035 IST--Government bond prices fell following a lower net purchase amount from the 'others' segment of market participants, dealers said. The lower quantum of 'others' purchases led to profit booking as traders shed their position on the view that the Reserve Bank of India will likely stop their on-screen gilt buys. The CPI inflation data disappointed traders expecting deflation in October. Some traders also placed short bets ahead of the weekly gilt auction Friday. 

After being top net buyers of gilts for six consecutive trading sessions till Tuesday, the 'others' segment of market participants slowed down its purchase of gilts with a net buy of INR 13.80 billion worth of gilts Wednesday, according to data from Clearing Corp. of India. This figure is much lower than the segment's daily average purchases of around INR 50 billion from Nov. 3 till Tuesday. Foreign banks were the top net buyers of gilts Wednesday, netting purchases worth INR 48.84 billion. Traders will track the movement of bond prices during the day for any indication of purchases from the 'others' segment, dealers said. Since Nov. 3, the 'others' segment has net bought gilts worth INR 315.10 billion, most of which were purchases by the RBI, traders speculate.

Some traders also placed short bets ahead of the weekly gilts auction, which also weighed on the bond prices. On Friday, the government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 bond. Both are longer-term securities and the fresh supply on Friday deterred traders from purchasing gilts maturing in more than 10 years in spite of lucrative yield spreads over the benchmark 10-year gilt.

State-owned banks likely sold the 10-year bond after they bought this paper in the secondary market on Tuesday to take a position before the announcement of the CPI inflation data. The bond prices rose sharply as traders bought gilts on hope of the CPI inflation data being negative as most of the traders expected deflation in October. Data released Wednesday showed CPI inflation fell to 0.25% in October from 1.44% in September. The headline print could have been even lower last month if not for the record high prices of gold and silver. However, the figure was still far below the RBI's target range of 2-6%.

"The market has mixed sentiment about the CPI data," a dealer at a state-owned bank said. "For traders who were hoping for deflation, this data is still higher...but it is still lower than 1% so they are not letting go of the rate cut hope in December." 

At 1035 IST, the turnover in the gilt market was INR 82.10 billion, lower than INR 243.65 billion at 1030 IST Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.33%, 2035 bond is seen moving in a range of 6.48-6.55% during the day, while that on the 6.48%, 2035 benchmark bond is seen at 6.43-6.49%. (Janwee Prajapati)

India Gilts:Seen dn as 'others' buys low, govt says Delhi blast act of terror

MUMBAI – Prices of government bonds are seen opening lower Thursday after the 'others' category of market participants netted a smaller-than-estimated figure of purchases, and after the Centre declared Monday's car blast in New Delhi an act of terrorism, dealers said. 

The yield on the 10-year benchmark 6.48%, 2035 gilt is seen moving in a range of 6.43-6.50% during the day. On Wednesday, the benchmark 2035 gilt ended at INR 100.14, or 6.46% yield. The erstwhile 10-year benchmark 6.33%, 2035 bond is expected to move in a range of 6.47-6.55%. On Wednesday, it ended at INR 98.84, or 6.50% yield.

After six consecutive sessions of being the largest net buyers of gilts, the 'others' segment of gilt market participants — which includes insurance companies, provident funds and the Reserve Bank of India – was trumped by foreign banks Wednesday, but remained net buyers. Foreign banks were the largest net buyers of gilts Wednesday, netting purchases worth INR 48.84 billion. The 'others' category net bought gilts worth INR 13.80 billion in the same session. Since Nov. 3, the 'others' segment has net bought gilts worth INR 315.10 billion, most of which is purchases by the RBI, traders speculate. Some traders had expected the RBI to net purchase gilts up to INR 400 billion to INR 500 billion in this spate of recent buys, and may be disappointed at the small figure Wednesday. 

A delayed reaction to India's headline inflation for October printing at a record low may limit losses, dealers said. Data released Wednesday showed CPI inflation fell to 0.25% in October from 1.44% in September. The headline print could have been even lower last month if not for the record high prices of gold and silver, and some dealers who were expecting deflation were disappointed. However, the figure is still far below the RBI's target range.   

Meanwhile, the Union Cabinet at its meeting Wednesday pronounced Monday's car explosion in Delhi as an act of terrorism. Market participants are concerned that if India retaliates, this could escalate into a larger conflict. US Secretary of State Marco Rubio said the US had offered India help in the case, but noted that India was "very capable" and "doing a good job" on the investigation. 

At 0810 IST, the yield on the 10-year benchmark US Treasury note was 4.09%, unchanged from 1700 IST Wednesday. The US House of Representatives approved an interim spending bill that would end the longest prolonged government shutdown in the US, with 222 votes in favour and 209 against. The White House said US President Donald Trump would sign the spending package. However, the US jobs and consumer price index reports for October are likely to be never released due to the government shutdown, White House Press Secretary Karoline Leavitt said. (Cassandra Carvalho)

End

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

Edited by Saji George Titus

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