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Informist, Friday, Nov. 28, 2025

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds tumbled nearing the end of trade, as traders unwound bets of a rate cut by the Reserve Bank of India's Monetary Policy Committee next week. India's GDP growth in the September quarter came in at 8.2%, 100 basis points higher than an Informist poll estimate, and also higher than the RBI's forecast of 7.0%. Traders were expecting a growth of around 7.2%, and were unprepared for a print above 8.0%. 

 

The 10-year benchmark 6.48%, 2035 gilt closed at INR 99.80, or 6.51% yield, against INR 100.11, or 6.46% yield Thursday. The most traded 6.33%, 2035 gilt ended at INR 98.49, or 6.55% yield, against INR 98.75, or 6.51% yield, in the previous session. The 6.33%, 2035 bond yield rose the most in a day since Sept. 18. The five-year benchmark 6.01%, 2030 bond yield rose over 6 bps Friday, the most in a day since Aug. 18.

 

Losses were limited on purchases at levels seen lucrative, as the 6.33%, 2035 bond yield neared the psychologically crucial 6.55% mark. Some traders said gilts were "oversold" after the GDP data and expect a recovery in prices next week. Some traders also said that a low nominal GDP print supported the need for a rate cut. India's nominal GDP growth was 8.7% in Jul-Sept, higher than 8.3% a year ago. The Union Budget had forecast a nominal GDP growth of 10.1% in 2025-26 (Apr-Mar). Upasna Bhardwaj, chief economist, Kotak Mahindra Bank, retained expectations of 25 bps rate cut at the Monetary Policy Committee meeting next week since the inflation trajectory remains benign. 

 

"It (a rate cut) looks difficult right now, only if he (RBI) focuses on nominal (GDP) and future trajectory, then it can be done, but I'll say 40% chance (of rate cut next week) right now, down from 50-60% chances earlier," a dealer at a private sector bank said. 

 

Until the data, traders were pricing in a 25-bps cut in the repo rate on Dec. 5. The 10-year benchmark 6.48%, 2035 bond yield had fallen 5 bps from last Friday till Thursday after RBI Governor Sanjay Malhotra Monday reiterated that latest economic data raised scope for a rate cut. However, a strong growth print reduced the need for easing monetary policy, dealers said.

 

On the offshore front, focus will now be on any indication of India and the US cementing a trade deal. Domestically, traders look to next week's policy decision, and see several options for policy easing on the cards. Expectations of the MPC abstaining from a rate cut, and the central bank instead announcing a calendar of open market purchase of gilts through auction are gaining momentum. Traders also expect a "dovish commentary", or indications from tone and phrasing of the panel's members towards rate cuts, which is seen propelling bond yields downwards by around 5-6 bps. 

 

"Word on the Street is that they (RBI) may announce OMO (open market operations) in this policy, that OMO will be effective from January," a dealer at a state-owned bank said. "And I think tone will also be dovish only. I think they will hold rates this meeting, probably they will see Fed's action, then they can take some action in February." According to the CME FedWatch tool, Fed fund futures traders are pricing in an 87% chance of a 25-bps "Christmas rate cut" at the US Federal Open Market Committee's meeting in December.  

 

The weekly bond auction sailed through, but bond prices failed to react to the result due to caution ahead of GDP data. Additionally, the reaction to the auction result was all the more muted in the secondary market since all four papers at the auction were illiquid securities, and were not actively traded in held-for-trading books, dealers said. While demand for long-term bonds was robust at the auction, papers of these tenures were down the most by end of trade. At the day's low, the 6.90%, 2065 gilt was down 90 paise from Thursday's close, but recovered some losses by market close. 

 

Turnover in the gilts market was INR 436.85 billion, up from INR 377.50 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

Gilts are not traded Saturdays. Traders have mixed views on market open Monday. Some said bond prices will fall further as traders digest the GDP print, which was released near the end of trade Friday. However, the rise in the 10-year 6.33%, 2035 bond yield is seen capped at 6.55-6.56%. Some traders expect bond prices to open higher, since the fall in prices Friday was too sharp. Going into the policy decision end of next week, bond prices may rise on optimism of a rate cut, especially since nominal GDP is lower than the budgeted estimate, dealers said. Hopes of an announcement of an open market calendar to purchase gilts through auction are also gaining momentum, and traders now hope for OMOs in the range of INR 2.00 trillion to INR 3.00 trillion from INR 1.50 trillion earlier. Traders also expect the central bank to downgrade its CPI forecasts, due to the Centre's recent cut in goods and services tax, and a near-zero inflation print in October. 

 

On the flip side, bond prices may open lower after the RBI post market hours said 13 states will raise INR 313.50 billion through bond sale Tuesday, higher than INR 210.00 billion indicated in states' borrowing calendar for Oct-Dec. Further, fresh supply of INR 320 billion of a 10-year bond on Dec. 5, the same day as the policy outcome, may weigh on risk appetite, dealers said. 

 

Traders may also track global cues as traders in the US return to their desks after the Thanksgiving holiday weekend. 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. The institution likely 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 6.45-6.55% Monday. The yield on the 6.33%, 2035 bond is seen at 6.50-6.60%.

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	99.8000	6.5063%	100.1100	6.4633%
6.33%, 2035	98.4900	6.5463%	98.7525	6.5082%
6.01%, 2030	99.1250	6.2278%	99.3800	6.1631%
6.68%, 2040	97.6500	6.9376%	98.0700	6.8906%
6.90%, 2065	93.7000	7.3932%	94.4000	7.3355%

 

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India Gilts: Slump; next wk rate cut chances seen slim as Q2 GDP above view

 

	1615 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	99.80	100.14	99.78	100.10	100.11
YTM (%)	6.5063	6.4591	6.5087	6.4646	6.4633

 

	1615 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.48	98.79	98.45	98.70	98.75
YTM (%)	6.5477	6.5035	6.5521	6.5158	6.5082

 

MUMBAI--1615 IST--Prices of government bonds slumped after India recorded a GDP growth of 8.2% in the September quarter, sharply higher than what traders had estimated, dealers said. Traders unwound bets of a rate cut by the Reserve Bank of India's Monetary Policy Committee next week, as a strong growth print reduced the need for easing monetary policy. Traders were expecting a print of around 7.2%, which was already higher than the RBI's projection of 7.0%. Of the 21 economists polled by Informist, only State Bank of India had forecast Jul-Sept GDP growth at 7.5-8.0%, all other estimates were below 8.0%.  

 

Until the data, traders were pricing in a 25-basis-point cut in the repo rate on Dec. 5. The 10-year benchmark 6.48%, 2035 bond yield had fallen 5 bps from last Friday till Thursday after RBI Governor Sanjay Malhotra Monday reiterated that latest economic data raised scope for a rate cut. However, post the GDP data, traders said that there were 20-40% chances of a rate cut next week. 

 

However, losses were limited on purchases at levels seen lucrative, as the 6.33%, 2035 bond yield neared the psychologically crucial 6.55% mark. Some traders also said that a low nominal GDP print supported the need for a rate cut. India's nominal GDP growth was 8.7% in Jul-Sept, higher than 8.3% a year ago. The Union Budget had forecast FY26 nominal GDP growth at 10.1%. 

 

"Definitely its (Jul-Sept GDP) higher, the number has come up but the nominal GDP has come slightly lower, so I think that is something positive for the market to see right now," a dealer at a private sector bank said. "Though market reaction is not a similar view, everyone is looking at headline of 8.2%."

 

Traders said that a rate cut by the MPC next week hinged on expectation of a fall in growth in the near-term trajectory. RBI officials had said at the previous policy meeting that while Jul-Sept growth may be strong, the growth trajectory December quarter onwards could weaken due to external risks, dealers said. Traders now await any indication of a trade deal between US and India, for cues on the rate trajectory. Several traders were expecting the deal by the end of the month. 

 

At 1630 IST, turnover in the gilts market was INR 364.10 billion, higher than INR 343.95 billion traded by the same time Thursday, 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 6.48-6.52%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.50-6.56% for the rest of the day.  (Cassandra Carvalho)

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India Gilts:Down as investors trim risk before GDP; auction on expected lines

 

	1527 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.06	100.14	100.05	100.10	100.11
YTM (%)	6.4701	6.4591	6.4715	6.4646	6.4633

 

	1527 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.70	98.79	98.67	98.70	98.75
YTM (%)	6.5158	6.5035	6.5198	6.5158	6.5082

 

MUMBAI--1527 IST--Prices of government bonds were slightly down as traders trimmed risk ahead of India's GDP growth for the September quarter, after the gilt auction result was in line with expectations, dealers said. The INR 320-billion auction sailed through, with robust demand across the four papers auctioned. Bond prices largely remained in a thin band, and volumes were low, due to caution ahead of the key data, which is due at 1600 IST. Traders' outlook on the domestic rate trajectory hinges on the GDP print ahead of the RBI's Monetary Policy Committee meeting next week.

 

India's GDP growth rate likely fell to a three-quarter low of 7.2% in the September quarter, according to the median of estimates of economists polled by Informist. Traders largely expect a print of around 7.2%, higher than the RBI's projection of 7.0%. A growth rate near 8.0% may weigh on rate-cut expectations whereas a reading closer to 7.0% will fuel rate-cut bets in December and beyond, dealers said. While bond prices were slightly lower ahead of the data, some traders hope bond prices will end higher Friday. Some traders have priced in a higher print because RBI officials had said at the previous policy meeting that while Jul-Sept growth may be strong, the growth trajectory December quarter onwards could weaken due to external risks, dealers said.

 

"We're hoping that something good will come to the market. It all depends on the GDP data. If GDP figures are as per the survey (poll) estimate at 7.3%, if that will be the data then I don't see any much movement," a dealer at a state-owned bank said. "But if it shows around 7.1% or lower, then there will be significant movement (rise in prices)."

 

At the auction, the government sold the entire notified amount of INR 320 billion. Cut-off prices were at par with, and above expectations. However, along with caution before GDP data, the reaction to the auction result was all the more muted in the secondary market since all four papers at the auction were illiquid securities, and were not actively traded in held-for-trading books, dealers said. 

 

Traders and banks' asset and liability managers lapped up supply of the short-term 5.91%, 2028 and 6.28%, 2032 gilts, on expectations of a rate cut by the Monetary Policy Committee next week. In a rate cut cycle, short-term bond yields fall greater than other tenures. Firm demand from long-term investors such as insurance companies was seen for the 7.24%, 2055 bond and the 6.98%, 2054 green bond. Demand for bond forward rate agreements in the 2055 bond was small, but the total quantum of the bond at auction was also on the lower side, dealers said. The green bond cut-off price surpassed expectations at INR 97.22, against an Informist poll estimate of INR 96.80. The RBI accepted 1 out of the 61 bids for the 2054 green bond at auction. An insurance company likely bought the gilt to fulfil regulatory norms for infrastructure investments, dealers said.

 

Prices briefly inched higher on news that the RBI would have a press conference at 1700 IST, but erased gains after further information that the conference was unlikely to be market-related. RBI Deputy Governor Shirish Chandra Murmu will address the media at 1700-1800 IST on 'Consolidation of Regulatory Instructions'.

 

At 1527 IST, turnover in the gilts market was INR 204.55 billion, lower than INR 325.25 billion traded by 1530 IST Thursday, 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 6.42-6.52%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.45-6.56% for the rest of the day.  (Cassandra Carvalho)

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India Gilts: Recover losses as auction demand seen firm on rate cut hope

 

	1240 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.13	100.14	100.05	100.10	100.11
YTM (%)	6.4604	6.4591	6.4715	6.4646	6.4633

 

	1240 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.76	98.78	98.67	98.70	98.75
YTM (%)	6.5071	6.5042	6.5198	6.5158	6.5082

 

NEW DELHI--1240 IST--Government bond prices recovered all losses as demand at the weekly gilt auction of INR 320 billion was expected to be firm and the fresh supply would sail through on hopes of a domestic rate cut next week, dealers said. Volumes remained thin before the auction result and India's September quarter GDP data at 1600 IST. 

 

"There was no reason for the market to fall actually, the auction is going to go through quite well today (Friday) I feel," a dealer at a state-owned bank said. "Since this recovery had happened after the bidding ended, I have a feeling that traders were looking to influence the market (negatively) before auction and were not able to succeed, so they are covering (short sales) now."

 

The INR-90-billion supply of the 5.91%, 2028 gilt would largely be mopped up by asset-liability management desks at banks, dealers said. At the expected cut-off yield of around 5.80%, the bond offers a "lucrative" spread over banks' cost of funding, usually at or below the policy repo rate of 5.50%, they said. A rate cut as expected by the Reserve Bank of India's Monetary Policy Committee next week has only served to make the bond more attractive. Traders from banks and mutual funds were also keen to pick up the rate-sensitive gilt before the potential rate cut next week, dealers said.

 

The same reasons were drawing demand to the seven-year benchmark gilt at auction as well, with the Deposit Insurance and Credit Guarantee Corp. also said to be bidding for the paper. The RBI had rejected all bids for the 6.28%, 2032 gilt at its last auction on Oct. 31, cutting out INR 110 billion of supply. Traders speculated that was more to with the government being uncomfortable with the market asking for a cut-off yield on the seven-year paper higher than the 10-year gilt, rather than a signal from the RBI to cap yields. Dealers do not see a devolvement or rejection of bids at the auction Friday.

 

"The market is already long and there is GDP immediately after auction, so there is some wariness in picking anything up to trade," a dealer at a private sector bank said. "I think the potential pain point in the auction is that 2055 bond, all the other bonds are looking quite okay."

 

Demand for the 7.24%, 2055 gilt from traders was muted as they had suffered losses on long-term bond holdings. Insurers and pension funds' also did not bid aggressively for the gilt at the auction. Both sets of investors have not seen large inflows and so did not have much cash to deploy, while there was only limited demand for forward-rate agreements as well in the 30-year benchmark paper, dealers said. The bond traded higher in the secondary market, though its last trade was only INR 50 million in size.

 

Meanwhile, insurers were keen to pick up the 6.98%, 2054 green bond especially with its small INR-50-billion supply. Investors sought the gilt to fulfil regulatory norms for infrastructure investments, which the green bond is classified under by the Insurance Regulatory and Development Authority of India. The RBI would not be required to nudge the market for the green bond to be mopped up, dealers said. Effectively, the green bond gave the long-term investors an advantage of around 15 basis points on an annualised basis over a 15-year infrastructure bond issued by a corporate house while better matching long-term liabilities, a fund manager at a life insurer said. 

 

Even after the auction result, dealers said the market would look forward to the GDP data for cues heading into the week of the monetary policy review. At 1235 IST, the turnover in the gilts market was INR 95.20 billion, half that of the INR 199.35 billion traded by 1230 IST Thursday, 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 6.42-6.52%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.45-6.56% for the rest of the day.  (Aaryan Khanna)

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India Gilts: Fall slightly on short sales ahead of auction; GDP data awaited

 

	1025 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	100.06	100.11	100.05	100.10	100.11
YTM (%)	6.4701	6.4636	6.4715	6.4646	6.4633

 

	1025 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.33%, 2035
PRICE (INR)	98.70	98.73	98.67	98.70	98.75
YTM (%)	6.5162	6.5118	6.5198	6.5158	6.5082

 

MUMBAI--1025 IST--Government bond prices fell slightly as traders placed short bets ahead of the weekly gilt auction Friday, dealers said. Traders were reluctant to pick up gilts as most of them had already positioned for a rate cut next week and were cautious ahead of the gilt auction result and the GDP data to be released later in the day. Trade volumes were thin ahead of the two significant cues. 

 

Demand at the auction will likely be firm as traders are expected to cover the short bets placed ahead of the fresh supply. Public-sector banks will likely pick up the bonds maturing up to seven years at auction, while long-term investors such as insurers and pension funds will bid for the longer-term bonds, including the green bond, dealers said. Traders are also enthusiastic about picking up 6.28%, 2032 and the 5.91%, 2028 gilts at the auction on hope of a rate cut by the Reserve Bank of India's Monetary Policy Committee next week. The government will sell INR 320 billion of gilts, which includes 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 at auction at 1030-1130 IST. 

 

Even as the auction was in focus, traders said the GDP data will likely determine the trajectory of gilt prices heading into the policy meeting on Dec. 3-5. India's GDP growth likely fell to a three-quarter low of 7.2% in the September quarter, an Informist poll showed, even as some traders have priced in a higher growth number. 

 

"If the GDP data is anywhere between 7.2-7.6%, then there won't be much impact," a dealer at a primary dealership said. "...if the data is lower than 7.0%, then the market will rally, and if it is anywhere near 8.0% then it (bond prices) will fall and the movement can be up to 10 basis points on either side." 

 

At 1025 IST, the turnover in the gilts market was INR 29.45 billion, a fraction of the INR 96.50 billion traded by 1030 IST Thursday, 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 6.42-6.52%, while that on the 6.33%, 2035 bond is seen moving in a range of 6.45-6.56% for the rest of the day.  (Janwee Prajapati)

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India Gilts: Seen steady before auction result, GDP data in 2nd half

 

NEW DELHI – Government bond prices are seen opening steady amid lack of fresh cues and caution ahead of the weekly gilt auction worth INR 320 billion and India's GDP data for the September quarter. Trade volumes are expected to remain thin before the two major cues, dealers said. 

 

The 10-year benchmark 6.48%, 2035 bond yield is seen in the range of 6.42-6.50% after ending at INR 100.11, or 6.46% yield, Thursday. The yield on the most traded 6.33%, 2035 bond is seen at 6.48-6.54%, against INR 98.75, or 6.51% yield in the previous session. Prices are seen in a narrow band through most of the day before the release of the GDP data at 1600 IST, dealers said. 

 

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 at an auction at 1030-1130 IST. Demand at the debt sale is seen firm for the two shorter-term bonds. The 2028 gilt is seen well-bid by both state-owned and private sector banks for their asset-liablity management purposes amid expectations of a reduction in the policy repo rate to 5.25% next week, dealers said. 

 

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 the 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 by the deposit insurer, a wholly-owned subsidiary of the RBI, may be around INR 120 billion by early next week, dealers said.

 

However, there are concerns about demand from life insurers and other long-term investors for the supply of INR 120 billion in papers maturing in nearly 30 years. There was some optimism about investor appetite after the 7.09%, 2074 gilt was mopped up at an auction last week, but traders said that was likely due to a single large entity having an appetite for the 50-year benchmark. Some traders are also likely to bet on soft monetary policy by betting on the 2055 gilt, though they remain cautious after recording large losses on the bond earlier this year. The green bond is seen sailing through on a nudge to insurers from the Reserve Bank of India, dealers said. Investors gave the government a 'greenium', or green premium, of over 5 basis points at the last auction for the paper, proceeds from which will be used for environmentally sustainable projects.

 

Hopes of a rate cut persist heading into the release of India's September quarter GDP data, the last major data point for the RBI's Monetary Policy Committee to consider before its three-day meeting starting Wednesday. India's GDP growth is likely to have fallen to a three-quarter low of 7.2% in the September quarter, according to the median of an Informist poll of 21 economists. This is broadly in line with market expectations and above the RBI's projection of 7.0%.

 

Some traders said that a growth reading of even up to 7.5% would not deter rate cut bets, while a print close to the central bank's estimate may even open up bets of further rate cuts in February or beyond. However, if the GDP growth is closer to 8.0%, traders are sceptical of even the single rate cut in December. Even as CPI inflation fell to a record low of 0.25% in October, the RBI would also be wary of easing monetary policy after the recent weakness in the rupee, dealers said. The domestic unit fell to a record low of 89.4950 a dollar last Friday and has recovered only to 89.31 by Thursday after RBI intervention and a sharp fall in the dollar index. The RBI's management of the domestic currency will also be closed watched Friday.  (Aaryan Khanna)

 

End

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

 

Edited by Tanima Banerjee

 

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