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Informist, Thursday, Mar. 5, 2026

 

By Janwee Prajapati

 

MUMBAI – Government bond prices ended sharply up Thursday as the Reserve Bank of India most likely bought bonds in the secondary market, dealers said. Gains were limited as traders booked profit at levels seen lucrative and avoided building aggressive positions due to the military conflict in Iran.

 

The 10-year benchmark 6.48%, 2035 gilt closed at INR 98.87, up from INR 98.64 Wednesday. The closing yield was 6.6406%, down from 6.6732% Wednesday. In early trade, the bond's price had risen to an intraday high of INR 98.89 and its intraday yield had fallen to a low of 6.6373%. The 15-year benchmark 6.68%, 2040 gilt closed at INR 96.59, up from INR 96.44 Wednesday. The closing yield was 7.0612%, down from 7.0775% Wednesday. These were the two bonds that the RBI likely bought in the secondary market, dealers said.

 

The 10-year benchmark bond and 15-year benchmark bond were the highest traded bonds Thursday, the same as Wednesday. Traders speculated that the central bank bought gilts in the secondary market as trading volumes rose abruptly around noon, dealers said. Trading volume in the 10-year benchmark paper alone was more than half of the total volume.

 

Speculation about the RBI's on screen purchases was high as data released Wednesday showed the 'Others' segment of market participants, which includes the central bank, insurers, and provident funds, were net buyers of gilts Wednesday, dealers said. This market segment net purchased gilts worth INR 202.86 billion in the secondary market Wednesday, the highest since Feb. 11 2021, as per data from the NSE Cogencis WorkStation. So far this week, this segment has net purchased gilts worth INR 300.90 billion. Traders await the RBI Weekly Supplement to confirm if RBI bought gilts in the secondary market in the week to Mar. 27.

 

"I think RBI will be comfortable at 6.65% levels and will stop buying here," a dealer at a primary dealership said. "...If there is a further rise (in yields) then it will again support the levels."

 

Traders remained on the sidelines as their risk appetite is low given the ongoing conflict in West Asia. Moreover, public sector banks likely booked profit as the 10-year benchmark 6.48%, 2035 bond yield fell below the key level of 6.65%, lower than levels seen before the military conflict in West Asia started, dealers said. 

 

Apart from public sector and private sector banks, foreign banks and mutual funds also likely net sold gilts Thursday as they continued their selling from Wednesday, dealers said. Mutual funds were the top net sellers of gilts Wednesday. They net sold INR 134.58 billion worth of gilts, data showed. A major portion of these sales were likely concentrated in short-term bonds maturing in up to five years, dealers said. Foreign portfolio investors are likely to have net sold gilts worth INR 2.36 billion through the fully accessible route Thursday, according to data from Clearing Corp. of India at 1700 IST.

 

Bond prices were down in early trade as the rise in yield on the 10-year US Treasury note and the rise in crude oil prices weighed on sentiment. At 1700 IST, the yield on the benchmark 10-year US Treasury bond was 4.12%, up from 4.09% at the same time Wednesday. Brent crude oil futures for May delivery rose to $83.60 a barrel at 1700 IST from $82.12 a barrel the same time Wednesday.

 

"Given the current global scenario, everybody is on the sidelines," a dealer at a state-owned bank said. "...If the RBI stopped its on-screen gilt purchases, then the yield on the 10-year benchmark will most likely rise to 6.72-6.80%."

 

Traders were also reluctant to buy gilts as they expect yields to rise further, dealers said. The rise in oil prices will lead to higher inflation, which will most likely deter the RBI's Monetary Policy Committee from reducing rates in April, dealers said. This view will also lead to weak bidding at the weekly gilt auction Friday when the government will sell INR 160 billion of the 6.68%, 2040 bond and INR 130 billion of the 6.90%, 2065 bond, dealers said.

 

The turnover in the government securities market Thursday was INR 719.80 billion, down from INR 740.75 billion Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. For the ninth straight session, there was no trade using the RBI's wholesale e-rupee pilot.

 

OUTLOOK

Bond prices are likely to stay firm Friday if the 'Others' segment of market participants turns out to have been net buyers Thursday, dealers said. However, some traders will likely place short bets ahead of the auction to make space in their portfolio for the fresh supply which will weigh on the bond prices, they said.

 

Later in the day, bond prices are likely to fall a bit because some dealers expect the RBI to set a cutoff yield of 7.09% on the 6.68%, 2040 bond, slightly higher than the closing yield of 7.06%. Demand for the 15-year paper is expected to be strong, more so as this is the last auction for long-term gilts in the current financial year 2025-26 (Apr-Mar). There could be some profit sales after the auction results are known in the afternoon, but these are not expected to bring prices down significantly. The RBI will also sell the 6.90%, 2065 bond Friday. The total auction size for both the bonds is INR 290 billion.

 

As usual, bond traders will keenly watch developments in West Asia and the overnight movement in US Treasury yields. Some traders expect the yield on the 10-year benchmark bond to rise to up to 6.78-6.80% if the situation in West Asia worsens. However, if the RBI continues to support gilt prices through bond purchases, either in the secondary market or through open market operations, the yield on the 6.48%, 2035 bond could fall to 6.60-6.65%, dealers said. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.63-6.72% Friday.

 

	THURSDAY		WEDNESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	98.8675	6.6406%	98.6400	6.6732%
6.33%, 2035	98.2500	6.5857%	97.9400	6.6318%
6.01%, 2030	99.0650	6.2553%	99.0300	6.2645%
6.68%, 2040	96.5850	7.0612%	96.4425	7.0775%
6.90%, 2065	92.8500	7.4651%	93.0000	7.4524%

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India Gilts: Give up some gains on profit booking; up on likely RBI buys

 

	1555 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.83	98.89	98.58	98.67	98.64
YTM (%)	6.6460	6.6373	6.6816	6.6690	6.6732

 

MUMBAI--1555 IST--Government bond prices gave up some gains as traders booked profits at levels seen as lucrative, as the yield on the benchmark 10-year 6.48%, 2035 gilt fell below the key 6.65% level, the lowest since the US and Israel attacked Iran, dealers said. Most traders avoided building positions aggressively due to the ongoing geopolitical conflict in West Asia. Bond prices remained sharply up as the Reserve Bank of India likely continued to buy bonds in the secondary market, dealers said.

 

"There is nothing much going on in the G-sec (gilts) market... It's only the RBI and some intraday activity," a dealer at a private sector bank said. "I think it (the RBI) is buying both 10-year and 15-year... I am expecting around INR 70 – INR 80 billion buys today (from the RBI)."    

 

The rise in bond prices despite geopolitical turmoil was largely because the central bank likely bought gilts in the secondary market after the yield on the 10-year benchmark bond rose above 6.70%, dealers said. Some traders no longer expect the 10-year benchmark bond yield to rise above 6.72% on speculation that the RBI is not comfortable with such a high yield. 

 

The 'Others' segment of market participants, which includes the central bank, insurers, and provident funds, net purchased INR 202.86 billion in the secondary market Wednesday, the highest since Feb. 11, 2021, as per data from the NSE Cogencis WorkStation.    

 

Some traders placed short bets ahead of the weekly gilt auction Friday to make space in their portfolio, which weighed on bond prices. Traders expect banks to bid for the 6.68%, 2040 bond at auction, while long-term investors will pick up the 6.90%, 2065 bond, dealers said.   

 

At 1555 IST, the turnover in the gilts market was INR 635.75 billion, higher than INR 434.05 billion at 1530 IST Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The 10-year benchmark bond and the 15-year benchmark bond continued to hold most of the trading volume. The yield on the 10-year benchmark 6.48%, 2035 bond is seen at 6.60-6.68% during the rest of the day.  (Janwee Prajapati)

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India Gilts: Reverse losses; sharply up on RBI's likely on-screen purchases

 

	1315 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.82	98.87	98.58	98.67	98.64
YTM (%)	6.6470	6.6409	6.6816	6.6690	6.6732

 

MUMBAI--1315 IST--Government bond prices reversed earlier losses and rose sharply on likely purchases from the Reserve Bank of India, dealers said. Traders continued to trim their holdings and bond prices had fallen after a steady start due to a rise in US Treasury yields and crude oil prices. Risk appetite remained dull amid the ongoing conflict in West Asia after the US and Israel bombed Iran Saturday and killed its head of state.

 

Both the jump in prices and the concentration of trade volumes in the 10-year benchmark 6.48%, 2035 and 15-year benchmark 6.68%, 2040 gilts suggested the central bank was buying these two bonds in the secondary market, dealers said. The activity in the 2040 bond especially made it difficult for traders to place short sales, as is usually the case before an auction of the gilt. However, the 6.48%, 2035 bond alone constituted over 68% of the total trading volume.

 

"It's RBI only - there is no other way you could see such bids in current situation," a dealer at a private-sector bank said. "I think it (RBI) doesn't want 6.70% (on 6.48%, 2035 bond) level to break (upward)." 

 

Traders had expected RBI support Thursday after its speculated purchases led to a sharp recovery in gilt prices on both Tuesday and Wednesday. However, some traders had not expected such a large run up in gilt prices before the 10-year gilt yield has risen to the psychologically crucial 6.70% mar, dealers said.

 

The 'Others' segment of market participants, which includes the central bank, insurers and provident funds, net purchased INR 202.86 billion in the secondary market Wednesday, the highest since Feb. 11 2021, as per data from the NSE Cogencis WorkStation. So far this week, this segment has net purchased gilts worth INR 300.90 billion. Traders await weekly statistical supplement data to confirm if RBI bought gilts in the secondary market last week, when 'Others' net bought gilts worth INR 196 billion.

 

The rise in bond rices were capped due the geopolitical tensions in West Asia which led to a rise in US Treasury yields and crude oil prices, dealers said. At 1315 IST, the yield on the benchmark 10-year US Treasury yield was 4.13%, from 4.09% at 1700 IST Wednesday. Brent crude futures for May delivery rose to $83.74 a barrel at 1315 IST from $82.12 a barrel at 1700 IST Wednesday.

 

Trading volume at 1255 IST was six times the trading volume at 0945 IST. At 1315 IST, the turnover in the gilts market was INR 417.10 billion, higher than INR 351.85 billion at 1330 IST Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 10-year benchmark 6.48%, 2035 bond is seen at 6.64-6.71% during the rest of the day.  (Janwee Prajapati)

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India Gilts: Steady; short covering offsets impact of rise in crude, US ylds

 

	0950 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.63	98.72	98.63	98.67	98.64
YTM (%)	6.6748	6.6618	6.6748	6.6690	6.6732

 

NEW DELHI--0950 IST--Government bond prices were steady in early trade Thursday. The large purchases from 'Others' on Wednesday, speculated to be mostly purchases from the Reserve Bank of India, led to traders covering their short bets with more such intervention expected if yields go higher, dealers said. The rise in US Treasury yields and crude oil prices from Wednesday's limited any gains from the central bank's activity.

 

Bond prices have recovered sharply in both of the previous two sessions and helped the 10-year benchmark 6.48%, 2035 gilt's yield end below 6.70% due to the 'Others' segment, which includes the central bank, insurers and provident funds. The 'Others' segment of gilt market participants net purchased gilts worth INR 202.86 billion in the secondary market Wednesday, the highest since February 2021, as per data from the NSE Cogencis WorkStation. So far this week, this segment has net purchased gilts worth INR 300.90 billion, the most in a two-session span, adding to buys worth INR 196.03 billion in the week ended Feb. 27. 

 

"The market now expects the RBI to continue buying through March and it will probably end up keeping yields lower than here at the (financial) year-end also," a dealer at a primary dealership said. "Banks will also continue selling despite low LCR (liquidity coverage ratio) – there is always an opportunity to sell something at profit at these levels, 6.66-6.67% (on the 10-year gilt), and then invest in something else."

 

A rise in the rupee also aided prices, though that rise was also likely engineered by the central bank, dealers said. The domestic unit rose to 91.5150 a dollar in early trade from 92.15 a dollar at 1530 IST Wednesday, with the RBI likely selling dollars aggressively in the offshore non-deliverable forwards market. Some traders expect the RBI will sterilise the rupee liquidity hit from its foreign exchange intervention by buying bonds, especially in March when tight rupee liquidity would lead to a spike in yields on money market instruments amid robust credit growth, dealers said. 

 

However, traders kept to the sidelines as the gilt prices were not moving in line with fundamentals amid the escalating military conflict in West Asia. Bond yields across most economies have risen due to fears of a rise in inflation tracking the jump of over 15% in the price of Brent crude over the past week, dealers said. Foreign portfolio investors may also sell bonds as the 10-year US Treasury yield rose 4 basis points overnight to 4.12%.

 

At 0945 IST, the turnover in the gilts market was INR 66.80 billion, higher than INR 49.70 billion at 0930 IST Wednesday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. The yield on the 10-year benchmark 6.48%, 2035 bond is seen at 6.64-6.71% during the rest of the day.  (Aaryan Khanna)

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India Gilts: Seen down; heavy RBI intervention expected, may limit losses

 

NEW DELHI – Government bond prices are expected to fall Thursday tracking an overnight rise in US Treasury yields and crude oil prices, with appetite for gilts dull amid the military conflict in West Asia, dealers said. Expectations of large purchases from the Reserve Bank of India are expected to temper any rise in the 10-year yield beyond the psychologically crucial 6.70% level.

 

The yield on the 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.65-6.75% Thursday, after ending at INR 98.64, or 6.67% Wednesday. Bond prices had opened sharply lower but the 10-year and 15-year benchmark gilts recovered most losses on aggressive purchases speculated from the RBI which are expected to continue Thursday, dealers said.

 

Brent crude futures for May delivery rose to $83.64 a barrel at 0830 IST from $82.12 a barrel at 1700 IST Wednesday as the Strait of Hormuz, a key waterway for oil tankers, remained effectively shut for the fifth straight day. Iran has threatened to sink any vessel attempting a crossing. The US and Israel continued an aerial bombardment of Tehran and other cities .

 

With inflation concerns rising, the yield on the 10-year US Treasury note also rose to 4.12% at 0835 IST from 4.08% at 1700 IST Wednesday. Short-term US yields rose more than the 10-year yield as bets on rate cuts by the US Federal Open Market Committee in 2026 dwindled. This may lead to some foreign portfolio investors selling gilts maturing up to five years, with no further policy easing expected domestically either even as rupee liquidity is expected to remain in a comfortable surplus, dealers said. 

 

Losses may be limited as traders avoid large sales on expectations of 'Others' – a category which includes the central bank, insurers and pension funds – aggressively buying bonds. Bond prices have recovered sharply in both of the last two sessions and helped the 10-year gilt yield end below 6.70% due to the 'Others' segment, with most sections of the market opting to trim their portfolios. The 'Others' segment of gilt market participants net purchased gilts worth INR 202.86 billion in the secondary market Wednesday, the highest since February 2021, as per data from the NSE Cogencis WorkStation. So far this week, this segment has net purchased gilts worth INR 300.90 billion, adding to buys worth INR 196.03 billion in the week ended Feb. 27. 

 

Meanwhile, the government will sell INR 160 billion of the 6.68%, 2040 bond and INR 130 billion of the 6.90%, 2065 bond at auction Friday. Some traders have placed short bets ahead of the auction to make space in their portfolio for the fresh supply. Some traders expect firm demand from insurers at the auction as it is the last in the financial year 2025-26 (Apr-Mar). However, some long-term investors could avoid bidding aggressively due to the geopolitical uncertainty, dealers said.  (Aaryan Khanna) 

 

End

 

US$1 = INR 91.60

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

 

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

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