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Informist, Thursday, Nov. 27, 2025

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds ended down Thursday as traders took profits after a sharp rise in prices for three consecutive sessions, dealers said. Ahead of India's GDP growth data for Jul-Sept and the weekly gilts auction Friday, traders took the opportunity to trim portfolios and take profits.

 

The 10-year benchmark 6.48%, 2035 gilt closed at INR 100.11, or 6.46% yield, against INR 100.20, or 6.45% yield, Wednesday. The most traded 6.33%, 2035 gilt ended at INR 98.75, or 6.51% yield, against INR 98.86, or 6.49% yield, in the previous session. Long-term bonds were down more ahead of a fresh supply of INR 70 billion of the 7.24%, 2055 bond and INR 50 billion of the 6.98%, 2054 green bond at the auction Friday. The yield on the benchmark 10-year US Treasury note eased to 4.00% Thursday from 4.01% at 1700 IST Wednesday. US Treasuries are not being traded Thursday for the Thanksgiving holiday.

 

Bond traders had no dearth of triggers to trade on Thursday. US Treasury yields eased overnight. On the domestic front, anticipation of a 25-basis-point rate cut by the Reserve Bank of India's Monetary Policy Committee next week was tempered by caution before India's September quarter GDP print, due Friday. A fresh supply of INR 320 billion worth of gilts Friday also weighed on bond prices.

 

"People seem (to think) that this is the last (rate) cut (by the MPC, if it were to cut rates next week). If this is the last cut, then we won't have space to go lower (in yields) from here," a dealer at a private-sector bank said. "Plus you have the GDP number, expectations are also on the higher side for Q2 (Jul-Sept). So people are taking money off the table. Then tomorrow's auction, it's a seven-year bond, last time he (RBI) had cancelled it, let's see what they do this time."

 

The government will also sell INR 90 billion of the 5.91%, 2028 bond and INR 110 billion of the 6.28%, 2032 bond at the auction Friday. Most traders expect the auction to sail through, even the sale of the 6.98%, 2054 green bond, because of expectations of a soft policy outcome next week. Demand for the seven-year paper is seen to be especially robust after the RBI rejected all bids for the 6.28%, 2032 bond the last time it was put up for auction on Oct. 31, dealers said.

 

Since several seven-year bonds are erstwhile 10-year benchmarks, gilts of this tenure were trading at yields closer to a 10-year paper. That changed this week. The 6.28%, 2032 bond yield has fallen around 4 bps from a week ago, aided by preference for short-term gilts because of rate-cut expectations. Traders expect the Deposit Insurance and Credit Guarantee Corp. to pick up the gilt at auction as well as gilts maturing in up to 15 years in the secondary market as it receives banks' half-yearly premium payments at the end of November. A few traders fear that the paper could be devolved if bids are at higher yields, instead of the RBI rejecting bids once again.

 

Primary dealerships and private-sector banks likely placed short bets before the auction. The number of trades in a paper in the special repo segment of the Clearcorp Repo Order Matching System is a proxy for tracking short sales in that bond. The data at 1800 IST showed trades worth a total of INR 145.97 billion in the 6.33, 2035 gilt, up from INR 139.33 billion Wednesday.

 

On the data front, traders largely expect India's GDP growth for the September quarter to be 7.0-7.5%, against the RBI's forecast of 7.0%. The GDP data are due 1600 IST Friday. Some traders have factored in a higher print since the RBI has said that while Jul-Sept growth will be strong, the growth trajectory could be weaker later due to external risks, dealers said. Moreover, RBI Governor Sanjay Malhotra's recent comments indicate that to gauge the need for a rate cut, the governor is prioritising low inflation over signs of slowing growth, dealers said. Malhotra Monday reiterated that latest economic data raised scope for a rate cut, dealers said. However, a growth rate near 8.0% may weigh on rate-cut expectations and drive bond prices down. A reading around 7.0% will fuel rate-cut bets.

 

"7.5% is a stretch I feel, it (Jul-Sept GDP) will be 7.3-7.4%, even 7.2% is possible," a dealer at a state-owned bank said. "If it is 7.5%, prices will be a bit down, but not much, because market has already been anticipating a higher print. Above 7.5%, then that might be a shocker for everyone... But the rate-cut expectation is based on the inflation data, not GDP."

 

However, uncertainty on a rate cut persisted as some traders see bond yields rising if the Monetary Policy Committee cuts rates by 25 bps next week. Traders expect such a cut to be the last of the current rate-easing cycle, leaving traders with no reason to pull bond yields lower, they said. Hence, some traders would prefer it if the RBI were to next week announce a calendar of open market purchases of gilts through auction, instead of a rate cut. Traders speculate that the RBI met market participants this week ahead of the policy outcome. 

 

Turnover in the gilts market was INR 377.50 billion Thursday, down from INR 517.40 billion in the previous session, 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 Thursday, the same as Wednesday.

 

OUTLOOK

On Friday, government bond prices may open steady on caution ahead of key economic data and the gilts auction of INR 320 billion. Global cues may be limited as US Treasuries are not traded Thursday for Thanksgiving. Trade activity may be limited as traders refrain from aggressive purchases ahead of India's September quarter GDP data due 1600 IST. Traders' outlook on the domestic rate trajectory hinges on the GDP print ahead of the RBI's Monetary Policy Committee meeting.

 

Traders will also track the result of the INR-320-billion gilts auction Friday. The central bank's management of the rupee will also be closely watched, dealers said. The lack of an announcement of an India-US trade deal so far may increase bets of a rate cut next week, dealers said. Several traders were expecting a deal by the end of the month. The RBI's rate-setting panel, at its policy meeting in October, had flagged concerns of risks to economic growth due to trade tariffs.

 

Traders will also look out for bond purchases of around INR 120 billion from the Deposit Insurance and Credit Guarantee Corp., a wholly-owned subsidiary of the RBI. Traders expect the institution to bid for the seven-year gilt at Friday's auction. The RBI arm insures bank deposits up to INR 500,000, and the premium for the first half of the financial year will be paid by the last working day of November. The institution usually invests this premium in gilts, especially in the 10-year and 15-year segments. 

 

Movement of crude oil prices may also influence gilts. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.40-6.52% Friday. The yield on the 6.33%, 2035 bond is seen at 6.45-6.55%.

 

	THURSDAY		WEDNESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	100.1100	6.4633%	100.2000	6.4508%
6.33%, 2035	98.7525	6.5082%	98.8550	6.4934%
6.01%, 2030	99.3800	6.1631%	99.4500	6.1454%
6.68%, 2040	98.0700	6.8906%	98.1800	6.8784%
6.90%, 2065	94.4000	7.3355%	94.5400	7.3240%

 

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India Gilts: Remain down; 6.28%, 2032 bond auction eyed

 

	1531 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.10	100.25	100.07	100.25	100.20
YTM (%)	6.4647	6.4439	6.4685	6.4439	6.4508

 

	1531 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.74	98.90	98.72	98.88	98.86
YTM (%)	6.5096	6.4869	6.5136	6.4894	6.4934

 

MUMBAI--1531 IST--Prices of government bonds remained down as traders booked profit, after bond prices ended higher for three consecutive sessions, dealers said. Traders trimmed risk before the release of India's GDP growth data for the September quarter due Friday, while some made room for fresh stock at Friday's gilt auction. 

 

The INR-320-billion gilt auction is seen sailing through on bets of the Reserve Bank of India's Monetary Policy Committee delivering a soft policy outcome next week. Traders have differing views on the decision, with some in favour of a 25-basis-point rate cut and others preferring an announcement of a calendar for open market purchase of gilts through auction. Focus at the weekly gilt auction Friday will be on the sale of INR 110 billion of the 6.28%, 2032 bond. The RBI rejected all bids for the bond at its last auction on Oct. 31, dealers said. Some traders expect the RBI to once again reject all bids if bids are at higher yields, while others fear that the bond could get devolved on primary dealers instead of the RBI rejecting all bids once again. However, the bond's auction could sail through as traders expect the Deposit Insurance and Credit Guarantee Corp. to pick up the gilt at auction as well as gilts up to 15 years in the secondary market as it receives banks' half-yearly premium payments at the end of November.  

 

A rise in swap rates also weighed on gilts, dealers said. The five-year swap rate climbed to a day's high of 5.71%, rebounding from a near two-week low of 5.68% hit on Wednesday. Private sector banks and primary dealerships were likely sellers in the secondary gilt market. If India's GDP growth is higher than expected, near 7.8% or above, then the 10-year benchmark gilt yield is seen rising near 6.50%. However, some traders expect the MPC to cut rates irrespective of the Jul-Sept GDP print, due to the narrow window for inflation to remain below the central bank's target range.

 

Bond prices are seen closing at current levels Thursday as while some traders expect prices to fall further nearing the end of trade, purchases on hopes of a soft policy outcome next week will offset the fall, dealers said. At 1530 IST, the turnover in the gilts market was INR 325.25 billion, lower than INR 401.40 billion at the same time Wednesday, 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 6.43-6.49%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.47-6.53% for rest of the day.  (Cassandra Carvalho)

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India Gilts: Fall on profit booking, short sales before auction Fri

 

	1326 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.12	100.25	100.08	100.25	100.20
YTM (%)	6.4619	6.4439	6.4674	6.4439	6.4508

 

	1326 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.76	98.90	98.73	98.88	98.86
YTM (%)	6.5078	6.4869	6.5115	6.4894	6.4934

 

MUMBAI--1326 IST--Government bond prices fell due to profit booking after the yield on the 10-year benchmark 6.48%, 2035 gilt fell to its lowest in over a month. Some traders also placed some short bets ahead of the weekly gilt auction Friday which weighed on the prices, dealers said. Traders refrained from placing aggressive trades even before the auction on caution before the GDP data, scheduled for release at 1600 IST Friday.

 

Banks were likely on the selling side again, similar to Wednesday, as the 10-year benchmark yield approached 6.44%, dealers said. The erstwhile 10-year 6.33%, 2035 bond was an even bigger target as traders who had bought the bond at a yield as high as 6.57% Monday found a profitable exit below 6.50% yield. Mutual funds, on other hand, likely added Treasury bills to their portfolios, continuing the momentum from Wednesday, dealers said. 

 

The short sales were not aggressive but just a move to manage risk before the auction, as some of the bonds that primary dealerships will bid for on behalf of clients are illiquid, dealers said. The pressure was the most on the most-liquid 10-year paper. A proxy for calculatng short sales is the number of trades in a bond in the special repo segment of the Negotiated Dealing System-Order Matching platform. At 1315 IST, the data from the Clearing Corp. of India showed trades worth over INR 140 billion in the bond. 

 

While all bonds are likely to sail through on expectations that the MPC will cut the repo rate next week, demand for the 6.28%, 2032 bond is seen as particularly robust after the RBI rejected all bids for the bond at its last auction on Oct. 31, dealers said. Even with the positioning before auction driving prices, traders remain more concerned about the GDP release and its potential impact on rate cut hopes. Comments from RBI Governor Sanjay Malhotra has led widespread expectations of a 25-basis-point rate cut. 

 

"Currently, I think the rate cut is 60:40 but, given the sentiment above, it seems like a rate cut in December," a dealer at a private sector bank said. "If there is a (rate) cut and the governor leaves the door open for another cut, the 10-year (yield) will rally up to 6.35% other wise we might see a fall up to 6.55-6.56%." 

  

At 1326 IST, the turnover in the gilts market was INR 244.45 billion, similar to INR 241.20 billion at 1330 IST Wednesday, 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 6.42-6.48%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.47-6.53% for rest of the day.  (Janwee Prajapati)

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India Gilts: Steady in thin trade on lack of cues; GDP, auction Fri eyed   

 

	1012 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.20	100.25	100.18	100.25	100.20
YTM (%)	6.4511	6.4439	6.4532	6.4439	6.4508

 

	1012 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.86	98.90	98.85	98.88	98.86
YTM (%)	6.4923	6.4869	6.4941	6.4894	6.4934

 

MUMBAI--1012 IST--Government bond prices were largely steady as traders await GDP data for the September quarter to be released Friday, dealers said. Volumes are likely to remain muted amid lack of cues as US markets are shut Thursday for Thanksgiving. Traders are likely to place short bets later in the day ahead of the weekly gilt auction at 1030-1130 IST Friday. 

 

An Informist poll of economists pegged GDP growth in Jul-Sept at a three-quarter low of 7.2% on year, slightly higher than the Reserve Bank of India's estimate of 7.0%. This will be the last major data point before the Monetary Policy Committee's meeting on Dec. 3-5. A growth rate near 8.0% may weigh on rate cut expectations and pull bond prices down, whereas a reading around 7.0% will fuel rate cut bets.

 

"I think the market will oscillate between 2 bps (basis point) today after the sell-off by banks yesterday (Wednesday)," the dealer at a primary dealership said. Public and private sector banks together net sold gilts worth INR 45.74 billion Wednesday, with private sector lenders being the top net sellers, according to data from Clearing Corp. of India

 

"There shouldn't be much volume today as we have a important data point tomorrow," the dealer said. "Also, the US market is closed today for Thanksgiving and tomorrow is also half-day."  

 

Traders are likely to short-sell bonds to make space in their portfolio for the fresh supply of gilts Friday, hoping to cover their short positions at a lower price at auction. The government will sell INR 90 billion of the 5.91%, 2028 bond, INR 110 billion of the 6.28%, 2032 bond, INR 70 billion of the 7.24%, 2055 bond and INR 50 billion of the 6.98%, 2054 green bond Friday. While all bonds are likely to sail through on expectations that the MPC will cut the repo rate next week, demand for the 6.28%, 2032 bond is seen particularly robust after the RBI rejected all bids for the bond at its last auction on Oct. 31, dealers said. 

 

Foreign portfolio investors are likely to continue picking up gilts, citing lucrative spreads over US Treasury yields, dealers said. FPIs net bought gilts worth INR 13.21 billion through the fully accessible route Wednesday, according to data from Clearing Corp. of India. The spread of the 10-year Indian gilt yield over the 10-year US Treasury yield was 245 basis points as of 1007 IST, against a low below 170 bps in Apr-May. The quantum of buys is not expected to drive up prices Thursday. 

 

At 1012 IST, the turnover in the gilts market was INR 86.65 billion, lower than INR 103.95 billion at 1030 IST on Wednesday, 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 6.42-6.50%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.48-6.53% for the rest of the day.  (Janwee Prajapati) 

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India Gilts: Seen steady on lack of fresh cues; GDP, auction Fri awaited

 

NEW DELHI – Government bond prices are seen opening steady amid lack of significant cues overnight. Slight easing of US Treasury yields amid rising US rate cut expectations may support at the open. Traders will be cautious before the release of India's September quarter GDP data and the INR 320-billion weekly gilt auction on Friday, dealers said. The movement in the rupee will also be closely watched after the recent volatility and weakness against the dollar.

 

The 10-year benchmark 6.48%, 2035 bond yield is seen in the range of 6.42-6.48% after ending at INR 100.20, or 6.45% yield, Wednesday. Comments by Reserve Bank of India Governor Sanjay Malhotra seen by traders as favouring a rate cut in December have driven the benchmark yield down 7 basis points from Monday's highs. The yield on the most traded 6.33%, 2035 bond is seen at 6.46-6.52%, against INR 98.86, or 6.49% yield the previous session, where both 2035 bonds eked out gains. 

 

The GDP data is the next cue for the domestic rate trajectory. India's GDP growth likely fell to a three-quarter low of 7.2% in the September quarter, according to the median in an Informist poll of economists. Traders largely expect a print of around 7.2%, against the RBI's projection of 7.0%. Some traders have priced in a higher growth number, since the RBI had said that while Jul-Sept growth would be strong, the growth trajectory from the December quarter could be weaker due to external risks, dealers said.

 

Until then, traders will retain their bets of a domestic rate cut at next week's policy review after Malhotra's comments, even as the RBI governor said Monday that whether or not the Monetary Policy Committee uses the space to cut rates in December would be assessed at the meeting. Most of the gains from the comments have already been priced into both bond prices and swap rates. Moreover, traders will book profits as the yield on the 10-year benchmark bond falls below 6.45%, dealers said.
 

Primary dealers may short-sell gilts ahead of the weekly gilt auction, through which the government will sell INR 90 billon of the 5.91%, 2028 bond, INR 110 billion of the 6.28%, 2032 bond, INR 70 billion of the 7.24%, 2055 bond and INR 50 billion of the 6.98%, 2054 green bond. The 2032 bond is in focus after the RBI rejected all bids for the bond at its last auction on Oct. 31. The Deposit Insurance and Credit Guarantee Corp. is expected to pick up the seven-year benchmark at auction as well as gilts up to 15 years in the secondary market as it receives banks' half-yearly premium payments at the end of November. The total quantum of purchases from the deposit insurer, a wholly-owned subsidiary of the RBI, may be around INR 120 billion by early next week, dealers said.

 

Offshore, Beige Book commentary released by the US Federal Reserve Wednesday showed weaker consumer confidence and labour market, even as latest weekly unemployment claims were lower than expected and durable goods order beat expectations in September. The 10-year US yield settled at 4.00% Wednesday, against 4.01% at 1700 IST Wednesday. 

 

Fed funds futures showed about an 85% chance of a 25-basis-point rate cut by the FOMC in December, up from 81?ay ago and 30% a week ago.

 

Lack of trade in US Treasuries Thursday due to the Thanksgiving holiday in the US will reduce volatility based on the external trigger, dealers said. Activity from foreign portfolio investors may also be muted after they bought INR 13.21 billion worth of fully accessible route gilts Wednesday.  (Aaryan Khanna)  End

 

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

 

Edited by Rajeev Pai

 

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