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Informist, Tuesday, Nov. 18, 2025

By Cassandra Carvalho

MUMBAI – Government bond prices ended off the day's highs Tuesday as traders who had placed intraday bets on gilts booked profits, dealers said. Traders also trimmed positions to avoid any new negative surprises overnight, dealers said. Bond prices ended higher on bets that the Reserve Bank of India was purchasing gilts onscreen, and after Business Standard reported that foreign portfolio investors gave positive feedback to Bloomberg Index Services on India's bond market operations, dealers said. This has raised the likelihood that India's fully accessible route gilts would be included in the Bloomberg Aggregate Index as early as January. An intraday fall in US Treasury yields also aided the rise in bond prices, dealers said. 

The 10-year benchmark 6.48%, 2035 gilt closed at INR 99.96, or 6.48% yield, against INR 99.86, or 6.50% yield, Monday. The most-traded 6.33%, 2035 gilt ended at INR 98.63, or 6.53% yield, against INR 98.51, or 6.54% yield, at the end of the previous session. Gains were more pronounced in the 6.33%, 2035 bond, on speculation that the RBI purchased the bond during the day, dealers said. The yield on the benchmark 10-year US Treasury note was 4.11% at 1700 IST, hitting a low of 4.10% during the day, from 4.13% at the same time Monday. 

"There was just some profit-booking, those who had taken intraday positions were unwinding," a dealer at a state-owned bank said. "Tomorrow what happens who knows, overnight where will US yields go, no one can say so after a good 15 paise rally there will be some profit-booking." 

Some traders speculated that the central bank was purchasing gilts on-screen Tuesday, primarily the 6.33%, 2035 bond, and said that the net purchase of INR 21.05 billion by the 'others' segment--which consists of insurance companies, provident funds and the RBI--on Monday could have been the central bank. Others said the rise in bond prices was due to bets on a potential $25 billion foreign inflow into gilts in 2026, following the news report that FPIs recommended including Indian gilts in the global index. As of 1700 IST, data from Clearing Corp. of India showed FPIs net purchased gilts worth INR 2.46 billion Tuesday through the fully accessible route.

FPIs' total holding of Indian government bonds has reached a record INR 3.20 trillion, according to data from Clearing Corp. of India. FPIs have been largely purchasing short-term gilts and the 10-year 6.33%, 2035 and 6.48%, 2035 gilts, dealers said. A fall in US yields also aided purchases from FPIs Tuesday, dealers said. However, some traders felt the speculation of the inclusion of Indian gilts in the global index has been in the gilt market for several months, and that by the time the announcement is expected in January, focus will shift to several other triggers, dealers said. 

"When is the announcement expected? January. Just after that, we have the budget, before that we have (MPC meeting outcome) policy and trade deal," a dealer at a private sector bank said. "So there's a lot of uncertainty, it's just some optimistic sentiment that has been revived now."

Traders largely expect a trade deal between the US and India to be cemented by the end of this month. A trade deal is seen as detrimental to the bond market, as it will boost Indian exports and growth and weaken the case for the Reserve Bank of India's Monetary Policy Committee to cut rates in December. Gilts are currently pricing in 30-60% chances of a 25 basis point rate cut in December, though traders have mixed views due to a lack of clarity.  

Some traders covered short bets during the day amid speculation of purchases from the RBI, dealers said. Several traders said they did not want to place fresh short bets in case the RBI purchased gilts on-screen, which would lead to a shortage of the 6.33%, 2035 bond and in turn, traders would get "short-squeezed" in the bond, dealers said. A proxy for tracking short sales in a particular bond is the number of trades in the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 1800 IST showed trades worth INR 142.86 billion in the 6.33%, 2035 gilt Tuesday, up from INR 133.35 billion Monday. 

State-owned banks likely purchased gilts in light volumes earlier in the day, as the yields on the 6.33%, 2035 and 6.48%, 2035 gilts hit technical levels of 6.55% and 6.50%, respectively, at the higher end of the recent trading range. 

Turnover in the gilt market was INR 421.20 billion, up from INR 307.55 billion Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. There were two trades worth INR 300 million in the 6.33%, 2035 gilt Tuesday, using the RBI's wholesale e-rupee pilot, against two trades worth INR 100 million in the 6.33%, 2035 gilt Monday.

OUTLOOK

On Wednesday, bond prices may track overnight movements in US Treasury yields at open, dealers said. Traders will track the net purchases and sales in the secondary market Tuesday from the 'Others' segment, the category that includes the RBI, following the net purchases of INR 21.05 billion Monday. Earlier assumptions that the central bank purchased gilts onscreen solely to replenish its portfolio after the redemption of the 5.15%, 2025 bond faded Tuesday, prompting traders to renew bets on support from the RBI at the Monetary Policy Committee meeting in December, either through a rate cut or by announcing a calendar for open market purchase of gilts through auction.

Some traders also expect an announcement of an India-US trade deal soon, which may dent bond prices, as it signals a higher growth outlook and reduces the need for open-market operations auctions, 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 largely expect a print of around 7.2%. State Bank of India forecasts India's GDP growth in Jul-Sept at 7.5%, against the RBI's projection of 7.0%. Some traders have priced in a higher print, since the RBI has said that while Jul-Sept growth will be strong, the growth trajectory later on could be weaker due to external risks, dealers said. 

Movement in US Treasury yields, crude oil prices, and the rupee may also influence gilts. The delayed US September jobs report is due Thursday. Bloomberg reported Tuesday that the initial applications for US jobless claims were 232,000 in the week ended Oct. 18, citing historical data for claims on the US Labor Department website. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.45-6.53% Wednesday. The yield on the 6.33%, 2035 bond is seen at 6.49-6.56%.

India Gilts: Up more on speculation of RBI buys; state auction sails through

MUMBAI--1532 IST--Government bond prices rose further on speculation that the Reserve Bank of India was likely purchasing the 10-year 6.33%, 2035 gilt, dealers said. Earlier assumptions that the central bank purchased gilts onscreen solely to replenish its portfolio after the redemption of the 5.15%, 2025 bond faded, prompting traders to renew bets on support from the RBI at the Monetary Policy Committee meeting in December, either through a rate cut or by announcing a calendar for open market purchase of gilts through auction. On the technical front, too, traders had expected the yield on the 10-year benchmark, 6.48%, 2035 gilt, to fall after rising to the psychologically crucial 6.50% level earlier in the day.

"Maybe insurers were there yesterday (Monday), but today (Tuesday) I feel RBI is there in the 10-year, easily some 2000-3000 crore (INR 20 billion to INR 30 billion) buys will be there from RBI today," a dealer at a state-owned bank said. "Technically, also we were expecting some reversal because on both the 10-year (bonds), the technical levels are hit, 6.55% (on the 6.33%, 2035 bond) and 6.50% (on the 10-year benchmark bond)." Traders speculated that the RBI was uncomfortable with the yield on the 6.33%, 2035 gilt hitting the key 6.55% level, the upper end of the recent trading range.

Some traders speculated that the net purchase of INR 21.05 billion by the 'others' segment on Monday was by insurance companies due to the lesser long-term state bond supply, while others said the RBI bought gilts onscreen. The 'others' segment includes insurance companies, provident funds and the RBI.
 

The INR-136-billion state bond auction sailed through, with strong appetite from insurers and pension funds amid limited supply of long-term bonds, dealers said. A lower-than-announced auction size and a lower concentration of long-term bonds assuaged fears of heavy long-term state bond supply. Traders expect Tuesday's auction pattern to continue, which spurred a rise in long-term gilt prices, along with demand from insurers, dealers said. The 6.90%, 2065 bond last traded at INR 94.03, up 25 paise from Monday's close. 

"The weighted average SGS (state government bond) cut-off dipped by 12 basis points to a 15-week low of 7.13% on Nov. 18, 2025, from 7.24% last week, amid a mild decline in the weighted average tenor of all SGS to 12 years from 13 years during the same period. This is the lowest cut-off since Aug. 12, 2025," Aditi Nayar, chief economist at ICRA, said in a note Tuesday. "... in terms of tenor, nearly 40% of the actual issuance this week was issued in shorter tenors, 34% in the longer tenors and 26% in the 10-year bucket."

Bond prices remained up after Business Standard reported that foreign portfolio investors gave positive feedback to Bloomberg Index Services on India's bond market operations, dealers said. This has raised the likelihood that India's fully accessible route gilts would be included in the Bloomberg Aggregate Index as early as January. A few traders expect the 6.33%, 2035 gilt yield to close at 6.50% by the end of trade.

At 1530 IST, the turnover in the gilt market was INR 326.80 billion, higher than INR 216.70 billion at the same time Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.48%, 2035 benchmark bond is seen at 6.46-6.51%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.48-6.55% during the day. (Cassandra Carvalho)

India Gilts: Rise on report FPIs keen on India inclusion in Bloomberg index

NEW DELHI--1235 IST--Government bond prices rose further after Business Standard reported that foreign portfolio investors gave positive feedback to Bloomberg Index Services Ltd. on India's bond market operations, dealers said. This raised the likelihood of India's fully accessible route gilts getting included in the Bloomberg Aggregate Index as soon as January.

The financial daily reported Tuesday, quoting people aware of the development, that large FPIs were keen on India's inclusion due to its attractive yields compared with peers like China, where government bond yields have shrunk to below 2%. Foreign investors also view the current dollar-rupee exchange rate of around 88.60 as an attractive entry point, according to the report. Bloomberg Index Services had in September sought feedback from investors by Nov. 30 on whether to include India's fully accessible route bonds in its flagship debt index, which is tracked by nearly $3 trillion of passive income.

India is currently being evaluated for a potential weight of around 1% in the index spread over roughly 10 months, if admitted, and which could lead to an inflow of around $25 billion, according to the Business Standard report. The formal announcement is likely in January, the report said.

"This will no doubt have a material difference on the market – $25 billion is a large amount," a dealer at a private-sector bank said. "Because this news and this reversal has come from psychologically crucial levels, we could see some momentum build up here."

India has been part of Bloomberg's Emerging Market Local Currency Indices since January, with its inclusion being phased in over the course of 10 months until November. India's fully accessible route bonds, which have no limits on foreign investment, have also been added to flagship emerging market local currency indices operated by JP Morgan and FTSE Russell.

Bond prices had opened steady, with a lingering negative sentiment from the speculated end of the Reserve Bank of India's secondary market bond purchases. This had been offset by purchases from state-owned banks at psychologically crucial levels on the 6.33%, 2035 and 6.48%, 2035 gilts, dealers said. However, the buys from state-owned banks were not large and the rise in prices after the report likely came from foreign and private-sector banks, dealers said. 

Traders await the result of the state bond auction, with the lower-than-indicated supply this week a positive. The increase in volumes and uptick in long-term investor demand for the 30-50 year bonds in the secondary market were also lending positive cues, dealers said. Benchmark bonds in those tenures were up despite the supply of the 50-year benchmark 7.09%, 2074 gilt this week. However, insurers likely did not bid aggressively at the auction, while banks likely bid for state bonds only maturing up to 15 years, dealers said.

At 1235 IST, the turnover in the gilt market was INR 169.05 billion, higher than INR 113.50 billion at 1230 IST Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.48%, 2035 benchmark bond is seen at 6.46-6.51%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.50-6.57% during the day. (Aaryan Khanna)

India Gilts: Tad up on likely PSU bk buys; volume thin on lack of fresh cues

MUMBAI--1030 IST--Government bond prices rose slightly as state-owned banks were likely buying gilts at psychologically crucial levels, following up on their activity from Monday, dealers said. Trade volumes were thin amid lack of significant cues.

State-owned banks were likely picking up the most-traded 6.33%, 2035 bond near 6.55% yield and the 10-year benchmark gilt at 6.50%, both psychologically crucial levels. This led to a slight rise in prices, though the appetite from state-owned banks may be diverted to state bonds and may not persist in gilts, dealers said. 

Seven states will raise INR 136 billion at an auction Tuesday, lower than the indicated size of INR 214 billion as per the indicative calendar for Oct-Dec. Demand for the bonds is likely to be firm at the auction as the banks are likely to pick up the state government bonds maturing in up to 15 years at spreads considered attractive over gilts. Demand from the insurers and pension funds is likely to be subdued.

Speculation that the Reserve Bank of India had stopped buying gilts in the secondary market weighed on bonds, though state-owned banks' purchase levels helped prevent losses, dealers said. The central bank had bought gilts worth INR 124.70 billion between Nov. 3 and Nov. 6, data released on Friday showed. In the week ended Nov. 7, 'others' – a category that includes the central bank – net bought INR 205.47 billion worth of gilts in the secondary market, according to Clearing Corp. of India data. These purchases fell to INR 130.23 billion last week. The net buys by 'others' on Monday, at INR 21 billion, were likely by insurers and provident funds rather than by the RBI, dealers said. 

"...RBI stopped buying gilts, it led to the negativity in the market," a dealer at a state-owned bank said. "Market only performs well as long as RBI buys, then it again starts falling. How frequently can we expect RBI to buy?"

At 1030 IST, the turnover in the gilt market was INR 72.10 billion, higher than INR 52.25 billion at the same time Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 6.48%, 2035 benchmark bond is seen at 6.47-6.51%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.51-6.57% during the day. (Janwee Prajapati and Aaryan Khanna)

India Gilts: Seen steady on lack of fresh cues; RBI buys likely at an end

NEW DELHI – Government bond prices are likely to open steady due to lack of fresh cues. The state bond auction result may lend direction in the second half of the day, but prices are expected to drift lower after speculation that the Reserve Bank of India has not bought gilts in the secondary market since Thursday, dealers said.

The 10-year benchmark 6.48%, 2035 bond yield is seen in the range of 6.47-6.53% after ending at INR 99.86, or 6.50% yield, Monday. The yield on the 6.33%, 2035 bond is seen at 6.52-6.57%, against INR 98.51, or 6.54% yield, Monday.

Gilt prices fell Monday after a record high merchandise trade deficit increased concern that the RBI's Monetary Policy Committee would not ease monetary policy in a bid to protect the currency. This led traders to trim their bets on a December rate cut, dealers said. The goods trade deficit shot up to $41.68 billion in October from $32.14 billion in September.

"Yields still ended higher Monday since the RBI is off the screen now. If the RBI is not there then I don't see a reason for any sustained buying to come in at these levels," a dealer at a private sector bank said.

'Others' bought gilts worth INR 21.05 billion in the secondary market Monday after three straight sessions of purchases under INR 15 billion. The category includes the RBI, provident funds and insurers. However, these purchases were likely led by insurance companies picking up long-term bonds in the secondary market at yields seen lucrative after traders continued to cut their holdings of such bonds, dealers said. The yield on the 40-year benchmark 6.90%, 2065 gilt has risen 7 basis points in the week ended Monday to 7.39%.

Traders remain uncertain on a December rate cut despite CPI inflation having fallen to a record low of 0.25% in October due to the rise in inflation expected in the March and June quarters. They await the release of the September quarter GDP growth data on Nov. 28. State Bank of India forecasts India's GDP growth in Jul-Sept at 7.5%, against the RBI's projection of 7.0%. 

Meanwhile, demand for state bonds from public sector banks at auction is likely to be robust, especially with several bonds maturing in under 10 years, dealers said. States will raise INR 136 billion at 1030-1130 IST, less than the INR 214 billion indicated for this week in the calendar for state borrowing for Oct-Dec.  (Aaryan Khanna)

End

US$1 = INR 88.6050

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

Edited by Saji George Titus

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