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Informist, Wednesday, Nov. 19, 2025

By Cassandra Carvalho

MUMBAI – Government bonds gave up early gains and ended marginally lower Wednesday as traders booked profits and speculation that the Reserve Bank of India may not offer support to bring down bond yields through policy easing or by open market purchases of gilts through auctions. This was after market talk that the central bank had held meetings with bank economists, dealers said. Prices were off the day's lows on likely purchases by state-owned banks in small quantum, dealers said.  

The 10-year benchmark 6.48%, 2035 gilt closed at INR 99.93, or 6.49% yield, against INR 99.96, or 6.48% yield, Tuesday. The most-traded 6.33%, 2035 gilt ended at INR 98.59, or 6.53% yield, against INR 98.63, or 6.53% yield, at the end of the previous session. The yield on the benchmark 10-year US Treasury note was 4.13% at 1700 IST, up from 4.11% at the same time Tuesday.

Traders booked profits after prices rose earlier in the day as sentiment improved on hopes of inclusion of Indian gilts in the Bloomberg's Global Aggregate Index by January, dealers said. Earlier in the day, foreign portfolio investors were said to have purchased gilts after financial daily Business Standard Tuesday reported that FPIs had given a positive feedback to Bloomberg Index Services on India's bond market operationality. As of 1700 IST, FPIs net sold gilts worth INR 11.42 billion through the fully accessible route Wednesday, according to data from Clearing Corp. of India.

Talk of meetings between the RBI and economists held Tuesday and Wednesday also weighed on bond prices, dealers said. Post the meetings, chances of a rate cut by the RBI's Monetary Policy Committee meeting in December remain uncertain, and an open market purchase of gilts through auctions does not seem likely, with some dealers saying it could only happen in Jan-Mar and not next month, dealers said.

"I think there was an economist meet today (Wednesday) with RBI, so post that some bit of (negativity was there). Not so clear about the rate cut or OMO (open market operation calendar) or anything, those kind of views are coming out so that could be the reason (for fall in bond prices)," a dealer at a private sector bank said.

Foreign banks likely purchased gilts during the day due to optimism on inclusion of Indian gilts in the global index. Some traders likely bought gilts Tuesday and early Wednesday on expectations that FPIs would buy bonds due to the report, and booked profits close to the end of the session Wednesday after FPIs purchased gilts during the day. FPIs were likely booking profits in some tenures and purchasing others, dealers said. FPIs made enquiries for illiquid papers such as the 6.19%, 2034 bond, a dealer said.

Some traders also speculated that FPIs were purchasing long-term bonds due to attractive yields. The 6.90%, 2065 bond ended at INR 94.30, up 20 paise from Tuesday's close, even as most other bonds ended down. Some traders also purchased long-term bonds. Insurance companies were also purchasing long-term gilts, and some dealers said that insurers and mutual funds were purchasing these bonds through Constituent Subsidiary General Ledger accounts held with foreign banks. On Tuesday, foreign banks had net purchased gilts worth INR 12.87 billion while 'others', a segment which includes insurance companies, provident funds and the RBI, net bought gilts worth INR 1.88 billion.

Mutual funds purchased large quantum of Treasury bills Wednesday, dealers said. In the 'Reported Deals T+1' segment of the RBI's Negotiated Dealing System-Order Matching platform, there were 10 trades conducted in the 91-day T-bill maturing on Feb. 19, 2026, for a total of INR 39.50 billion. There were 17 trades conducted in the 364-day T-bill maturing on Nov. 19, 2026, for a total of INR 27.95 billion. In the 182-day T-bill maturing on May 21, there were 13 trades for a total quantum of INR 13.85 billion. At the weekly T-bill auction Wednesday, the RBI set a cut-off yield of 5.38% on the 91-day T-bill, against an Informist poll estimate of 5.41%. Dealers said this was likely due to the bill's settlement date.

"Mutual funds would've only bought T-bills today (Wednesday). Your three-month paper (91-day T-bill) is an 'effective paper'," a dealer at a state-owned bank said. "The maturity date which is there, if that is a holiday, then you get the amount one day before or whichever working day falls before that. That's why today's three-month paper has a good cut-off of 38 quarter (5.3826%)."

Turnover in the gilt market was INR 350.95 billion, down from INR 421.20 billion Tuesday, 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 Wednesday, against two trades worth INR 300 million in the 6.33%, 2035 gilt Tuesday.

OUTLOOK

On Thursday, bond prices may track overnight movement of US Treasury yields after the minutes of the US Federal Open Market Committee's October meeting are released, dealers said. Ahead of the minutes, traders preferred taking positions in swaps rather than in gilts. Irrespective of the outcome of the FOMC minutes, the 10-year US yield is not expected to rise above the key technical levels of 4.17-4.20%, dealers said. Traders are more concerned about the chances of a domestic rate cut in December, dealers said. Traders may take cues from any news about developments at the meetings between RBI and economists.

Traders will track the net purchases and sales in the secondary market Wednesday from the 'Others' segment, the category that includes the RBI, even as expectations of the central bank purchasing gilts onscreen to bring down bond yields have diminished, dealers said.

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 sees 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 of crude oil prices and the rupee against the dollar 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% Thursday. The yield on the 6.33%, 2035 bond is seen at 6.49-6.56%.

India Gilts: Reverse gains on profit-sales, speculation of lack of RBI support

MUMBAI--1557 IST--Prices of government bonds on Wednesday reversed earlier gains to fall slightly as traders booked profits, dealers said. Speculation over a lack of support from the Reserve Bank of India either through policy easing or through open market purchases of gilts also weighed on prices, after rumours of the central bank meeting with bank economists, dealers said.

"Where there is no interest in buying only, in the morning there was some support because of optimism on index inclusion but people are taking the opportunity to book profits and no one wants to buy because we are not getting any indication of a rate cut," a dealer at a state-owned bank said. A lack of incentive to buy gilts, with no firm indications of a rate cut by the RBI's Monetary Policy Committee at its December meeting, deterred domestic traders from aggressively purchasing gilts, dealers said.

Prices were supported earlier in the day on likely buys from foreign portfolio investors on bets of Indian bonds being included in Bloomberg's Global Aggregate Index by January, dealers said. As of 1557 IST, data from Clearing Corp. of India showed FPIs net sold gilts worth INR 10.16 billion through the fully accessible route Wednesday. 

FPIs were likely booking profits in some tenures and purchasing others, dealers said. FPIs queried for illiquid papers such as the 6.19%, 2034 bond, a dealer said. State-owned banks were also purchasing gilts in light quantums, which limited the fall in bond prices, dealers said.

At 1530 IST, the turnover in the gilt market was INR 235.65 billion, lower than INR 326.80 billion at the same time Tuesday, 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 6.48-6.53%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.51-6.57%.  (Cassandra Carvalho)

India Gilts: Erase gains on profit booking; traders prefer long-term bonds

MUMBAI--1430 IST--Prices of the most-traded government bonds erased most gains as traders booked profits after an early rise in prices. Prices of gilts rose earlier on hope of India's inclusion in Bloomberg's Global Aggregate Index, which is seen driving foreign portfolio investment of around $25 billion into fully accessible route gilts in 2026.

FPIs had likely picked up the 6.33%, 2035 bond and 6.48%, 2035 gilt early in the day following the news, with yields on both bonds testing their lowest in a week. However, those bonds underperformed gilts of longer tenures as traders ramped up their bets on a rate cut by the Reserve Bank of India's Monetary Policy Committee in December after sitting on the sidelines over the past few days. Prices of bonds in 15 and 40 years have fallen sharply in recent weeks and are more lucrative than the 6.33%, 2035 bond and 6.48%, 2035 gilt, dealers said. The spread of the 40-year benchmark 6.90%, 2065 gilt over even the erstwhile 10-year benchmark 6.33%, 2035 is more than 80 basis points, seen lucrative.

"Traders are mostly picking up the paper considering a spread trade with the 10-year paper," said a dealer at a private sector bank. "The spread is expected to compress irrespective of the outcome of the December rate cut. If there is a rate cut, the longer-tenure bond prices will rise more and if there is not a rate cut, then the ten-year yield will rise more."

Traders reassessed their rate cut expectations as the next monetary policy meeting was only two weeks away. Even with a higher pace of GDP growth that the RBI estimates for the September quarter, traders said that the near-zero CPI inflation in October should prompt the Monetary Policy Committee to cut the repo rate. State Bank of India pegs India's Jul-Sept GDP growth at 7.5%, higher than the RBI's forecast of 7.0%, when the data is released on Nov. 28. Moreover, GDP growth is likely to moderate in the coming quarters, a fact acknowledged by both RBI Governor Sanjay Malhotra and Deputy Governor in charge of monetary policy Poonam Gupta. Latest data showed the impact of US tariffs are likely to be severe on net exports in the December quarter data--the merchandise trade deficit widened to a record $41.68 billion in October.

Even with a rate cut, traders said the RBI's commentary on the economic outlook is going to be key as CPI inflation is projected to climb to the central bank's medium-term target of 4% in the March quarter. If policymakers shut the door to further rate cuts like they did in June, bond prices are likely to react poorly, dealers said. 

"The rate cut expectation is fine, but the stance is more important," a dealer at a primary dealership said. "If the governor says this was all the committee could do and there is no room left for any further easing, then the market will definitely fall. Traders are very pessimistic these days."

At 1430 IST, the turnover in the gilt market was INR 199.15 billion, lower than INR 263.80 billion at the same time Tuesday, 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 6.48-6.53%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.51-6.57%.  (Janwee Prajapati)

India Gilts: Tad up on hope of inclusion in flagship Bloomberg debt index

MUMBAI--1030 IST--Government bond prices were slightly up as traders continued to buy gilts on hope of India's inclusion in the Bloomberg's Global Aggregate Index, dealers said. Gains were capped due to profit-taking as some traders said potential inflows from foreign portfolio investors were some time away and there was lack of fresh domestic cues.

Business Standard reported Tuesday that FPIs gave positive feedback to Bloomberg Index Services on India's bond market operationality, seen as one of the key barriers to index inclusion. India is currently being evaluated for a potential weight of around 1% in the flagship Global Aggregate Index spread over roughly 10 months, if admitted, and which could lead to an inflow of around $25 billion, according to the report. The formal announcement is likely in January, the paper said. 

"The news about the inclusion has changed the sentiment for all the participants, including PSUs (public sector banks) and primary dealers," a dealer at a state-owned bank said. "The inclusion will likely lead to more FPI inflows and increase demand for Indian bonds."

The speculation of the Reserve Bank of India buying gilts in the secondary market Tuesday reduced after 'others' – a category which includes the central bank – net bought only INR 1.88 billion worth of gilts Tuesday. Dealers also took profit as the 10-year benchmark yield has not fallen below 6.47% and approached that level on both Tuesday and Wednesday.

Traders are gearing up for the Monetary Policy Committee's meeting in December to see whether the central bank would support the bond market through open market operation auctions. Bets of a rate cut remain uncertain as dealers said they will likely position heavily only after the release of September quarter GDP data on Nov. 28. 

At 1030 IST, the turnover in the gilt market was INR 104.50 billion, higher than INR 61.05 billion at the same time Tuesday, 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 6.48-6.53%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.51-6.57% during the day amid lack of domestic or global cues.  (Janwee Prajapati)

India Gilts: Seen steady on lack of fresh cues, mixed views on trajectory

NEW DELHI – Government bond prices are expected to open steady due to lack of fresh cues on either the domestic or global front, dealers said. Some traders said prices may continue their upward momentum from Tuesday on hope of India's inclusion in Bloomberg's Global Aggregate Index and associated debt inflows next year. Others said profit-taking is likely to keep prices in check, especially as speculation that the Reserve Bank of India resumed secondary market purchases Tuesday was likely unfounded.

The 10-year benchmark 6.48%, 2035 bond yield is seen in the range of 6.45-6.51% after ending at INR 99.96, or 6.48% yield, Tuesday. The yield on the 6.33%, 2035 bond is seen at 6.49-6.56%, against INR 98.63, or 6.53% yield, Tuesday.

Bond prices rose Tuesday after Business Standard reported that foreign portfolio investors gave positive feedback to Bloomberg Index Services Ltd. on India's bond market operations. This raised hopes about India's inclusion in the flagship debt Global Aggregate Index, which may lead to foreign portfolio investors buying gilts in excess of $25 billion over 2026, dealers said.

Earlier assumptions that the central bank purchased gilts onscreen solely to replenish its portfolio after the maturity of the 5.15%, 2025 bond faded Tuesday, prompting traders to renew bets of 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. However, such hopes may ebb again as Clearing Corp. of India data showed 'others' – a category which includes the RBI, insurers and provident funds – bought gilts worth only INR 1.88 billion Tuesday, against INR 21.05 billion Monday.

Long-term bonds may rise as traders and investors are both keen on the securities at levels considered attractive, dealers said. The yield on the 40-year benchmark bond climbed to a September high of 7.41% on Monday. The supply of INR 120 billion of the 50-year benchmark 7.09%, 2074 bond is expected to sail through at the weekly gilt auction on Friday and is unlikely to affect demand for long-term bonds in the secondary market Wednesday, dealers said.

Some traders expect an announcement on the India-US trade deal soon, which may dent bond prices as it would lead to a higher growth outlook and reduce the need for open-market operation auctions, dealers said. While several traders expect a rate cut at the MPC's meeting in December, some said the MPC might hold off on rate cuts if India's 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 for 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 for 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 would be strong, the growth trajectory later on could be weaker due to external risks, dealers said.  (Aaryan Khanna)

End

US$1 = INR 88.58

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

Edited by Ashish Shirke

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