More Stories

Informist, Friday, Mar. 13, 2026

 

By Janwee Prajapati

 

MUMBAI – Prices of government bonds ended off the day's lows Friday as traders, especially from state-owned banks, bought bonds to replenish their portfolios after selling gilts at the INR-500-billion open market operation auction, dealers said. Bond prices had recovered almost all losses, tracking an intraday fall in Brent crude oil futures for May delivery below the key $100-per-barrel mark. However, as trading neared its end, dealers placed short bets to trim risks ahead of the weekend, amid fears of the war in West Asia escalating and Brent crude oil prices rising further. 

 

The 10-year benchmark 6.48%, 2035 gilt closed at INR 98.60, down from INR 98.69 Thursday. The gilt closed at a yield of 6.6798%, up from 6.6666% Thursday. Bond prices were down during the day as Brent crude for May delivery rose to over $102 per barrel intraday, before easing to INR 99.80 at 1700 IST, from $97.26 a barrel at the same time Thursday.

Trade volume in the secondary market was muted throughout the day as traders refrained from building aggressive positions ahead of the weekend, dealers said. The result of the OMO auction was slightly disappointing, and prices fell further after the result, dealers said, as the cut-off prices were lower than expected.

 

Public sector banks bought gilts after the yield on the 10-year benchmark bond rose to 6.70%, a level they considered lucrative, dealers said. Most of these purchases were to refill their portfolios after they sold bonds to the central bank at the INR-500-billion OMO auction Friday. 

 

"We bounced back from 6.69% (yield on the 10-year benchmark 6.48%, 2035 bond) as traders bought at these levels," a dealer at a state-owned bank said. "Most of the volume today (Friday) is due to replacement buys and weekend shorts (short bets)." 

 

At the OMO auction, public sector banks were the major sellers, especially in the 6.45%, 2029 bond, as it was 'in-the-money' or profitable, while insurance companies tendered the 7.62%, 2039 bond and the 7.06%, 2046 bond, dealers said. Only one bid out of 40 was accepted for the 7.06%, 2046 gilt, likely from a large state-owned insurance company, dealers said.  

 

The central bank received offers for over twice the total notified size of the OMO auction Friday. While both Monday and Friday's auctions had the same notified size, the RBI received offers of INR 1.08 trillion Friday, up from INR 888.57 billion Monday. The large number of offers was due to banks having ample stock of these papers in their portfolios, which were 'in-the-money' or profitable, dealers said. Furthermore, traders had expected the RBI to set a cut-off price sharply higher than expected at the OMO, similar to the last auction Monday, they said, which also led to the higher amount of offers.

 

Traders awaited the release of the RBI's Weekly Statistical Supplement data Friday to confirm widely-speculated purchases from the central bank in the week ended Mar. 6. As per data from Clearing Corp. of India Ltd., the 'Others' segment of bond market participants – which comprises the RBI, insurers, and pensions funds – net purchased gilts worth INR 559.50 billion between Feb. 27 and Mar. 5, both days inclusive. The RBI accounts for its on-screen gilt trades based on the day of settlement. The RBI data showed that the central bank net purchased gilts worth INR 572.10 billion on-screen in the week ended Mar. 6, the largest quantum of liquidity it has infused in a week through open market operations outside of auctions, according to RBI data going back to November 2012.

 

Some traders speculated that the central bank likely bought gilts in the secondary market Friday after the yield on the 10-year benchmark bond hit 6.7001%, dealers said. However, some traders said that the secondary market trading volume did not indicate such purchases.  

 

Across the yield curve, traders preferred the 10-year benchmark and 15-year benchmark papers as they expect the central bank to buy these bonds in the secondary market if yields rise past key levels, dealers said. Some favoured short-term bonds to replace bonds sold to the RBI in the OMO. Traders placed short bets on the 6.01%, 2030 bond to receive the five-year overnight indexed swap rate as the spread between the two instruments inverted, dealers said. The five-year OIS rose to 6.43% intraday before closing at 6.39%, up almost 5 basis points from Thursday's close. Some traders were reluctant to buy short-term bonds because they expected inflation to rise amid a spike in crude oil prices. This rise in inflation will lead to a hardening of yields, which will, in turn, impact short-term bonds the most, dealers said.

 

"It is very difficult to take any position in a market where the regulator is there," a dealer at another state-owned bank said. "If the support is waived and the effect of inflation and crude oil prices materialise, we will see a sharp spike in bond yields."

 

The turnover in the government securities market was INR 336.30 billion, down from INR 495.95 billion Thursday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. There has been no trade using the RBI's wholesale e-rupee pilot for a fortnight.

 

OUTLOOK

Gilts are not traded on Saturdays. Monday, traders will track the size of the state borrowing next week. The indicative calendar for state borrowing for Jan-Mar shows states aim to raise INR 438.00 billion Tuesday. Traders expect a number closer to INR 500 billion. Some traders also expect the RBI to announce liquidity infusion measures next week, such as additional OMO auctions, a dollar-rupee buy-sell swap, or a variable-rate repo auction of at least a one-week tenure, dealers said. Traders will look out for further indications of the RBI purchasing gilts on-screen after data Friday showed it bought gilts worth INR 572.10 billion on-screen in the week ended Mar. 6.

 

Traders will closely track movement in crude oil prices and developments in West Asia. Moreover, any significant movement in the rupee against the dollar and OIS rates will also lend cues to bond prices during the day, dealers said.

 

Traders are not carrying heavy positions in gilts, as ongoing developments in the West Asia conflict keep them wary of crude oil prices rising further, they said. 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. The 10-year benchmark 6.48%, 2035 bond is seen in the 6.62-6.75% range.

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	98.6000	6.6798%	98.6900	6.6666%
6.33%, 2035	98.4100	6.5627%	98.4625	6.5546%
6.01%, 2030	98.8050	6.3261%	98.8850	6.3042%
6.68%, 2040	96.2500	7.1001%	96.4000	7.0827%
6.90%, 2065	92.1900	7.5215%	92.4400	7.5001%

 

---

India Gilts: Off lows; traders replenish books, RBI on-screen buys speculated 

 

	1548 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.64	98.66	98.46	98.65	98.69
YTM (%)	6.6744	6.6711	6.7001	6.6729	6.6666

 

MUMBAI--1548 IST--Prices of government bonds were off the day's lows as traders purchased gilts to replenish their books after sales to the Reserve Bank of India at the INR-500-billion open market operations auction, dealers said. Traders also speculated that the central bank purchased gilts on-screen after the yield on the benchmark 10-year 6.48%, 2035 gilt briefly rose to the key 6.70% level. Bond prices had fallen further after cut-off prices on several bonds at the OMO auction were lower than expected, dealers said. Brent crude oil prices for May delivery eased off the day's high of $102.75, helping the recovery in bond prices, but bond prices remained down on fears of the oil price surge stoking inflation. 

 

The RBI accepted the entire notified amount at the OMO auction, as was expected. However, cut-off prices on some gilts were lower than expected. After the RBI set cut-off prices sharply higher than expected at the OMO auction Monday, traders were expecting the central bank to do the same Friday. However, some of the papers were not included in recent OMO auctions, and several banks had large stock of papers such as the 6.45%, 2029 bond, which was 'deep-in-the-money' or held at a profit in their books, which led to traders tendering at lower-than-indicated prices to book profits, dealers said. Cut-off prices on the longer-term 7.62%, 2039 bond and 7.06%, 2046 bond were also below those indicated by Financial Benchmarks India Pvt. Ltd. Thursday, as insurance companies tendered bonds aggressively, dealers said. 

 

"Cut-offs were not like last time, in fact they were lower (than expected). Last time was a surprise, RBI gave much higher, people were expecting the same to happen this time also," a dealer at a state-owned bank said. 

 

In the secondary gilt market, traders, especially from state-owned banks, which sold stock at the OMO auctions, bought gilts to replenish their books, dealers said. However, several traders placed short bets on gilts to trim their risk over the weekend, on fears that the West Asia war will escalate and crude prices will rise further. Traders also expect heavy state bond supply next week, the notice for which is expected post market hours. The indicative calendar for state borrowing for Jan-Mar shows states aim to raise INR 438.00 billion Tuesday. Traders expect a number closer to INR 500 billion. 

 

Traders also await RBI's Weekly Statistical Supplement data, for confirmation that the RBI purchased gilts on-screen in the week ended Mar. 6. As per data from Clearing Corp. of India, the 'Others' segment of bond market participants--which includes the RBI, insurers, and pensions funds--net purchased gilts worth INR 559.50 billion between Feb. 27 and Mar. 5, both days inclusive. The RBI accounts for its on-screen gilt trades based on the day of settlement. Traders expect the data to show around INR 500 billion worth of gilt purchases by the RBI. Some traders also expect the RBI to announce liquidity infusion measures for next week post market hours, such as more OMO auctions, a dollar-rupee buy-sell swap or a variable rate repo auction of at least a one-week tenure, dealers said. 

 

At 1548 IST, the turnover in the gilt market was INR 261.85 billion, lower than INR 453.25 billion at 1630 IST Thursday, 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 6.63-6.70% for the rest of the day. (Cassandra Carvalho)

---

India Gilts: Remain down in thin trade; result of RBI's OMO purchase awaited

 

	1315 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.62	98.66	98.59	98.65	98.69
YTM (%)	6.6769	6.6711	6.6813	6.6729	6.6666

 

NEW DELHI--1315 IST--Government bond prices were near the day's low as Brent crude contracts for May delivery rose above $101.50 per barrel, with traders concerned about higher inflation in India if the West Asia military conflict continues past March, dealers said. Trade volumes were thin as traders awaited the result of the Reserve Bank of India's INR 500-billion purchase of gilts through its open market operation auction.

 

Most traders had positioned for high crude prices to persist next week and had also trimmed their portfolios ahead of the weekend due to poor risk appetite and no signs of an end to the hostilities, dealers said. With no fresh cues intraday, gilts were stuck in a narrow band below Thursday's close.

 

Despite rising crude prices, dealers avoided short sales as they did not expect gilt prices to fall much further, with the RBI expected to buy bonds in the secondary market if the 10-year benchmark yield approaches 6.70%. Some banks may also step up purchases near the psychologically crucial level to replace stock sold to the central bank at its heavy OMO purchases over the past two weeks, both through auctions and speculated in the secondary market.

 

"There are no volumes and traders don't really have anything to do right now," a dealer at a state-owned bank said. "If the OMO has an impact, we could see prices rise a little but I don't think anybody is in a very active mood to buy or sell right now at these levels."

 

At Friday's OMO auction, most banks tendered the seven gilts the RBI had chosen to buy at prices higher than the indicative levels published by Financial Benchmarks India Ltd. for Thursday. However, the expected cut-off yields are 1-5 basis points lower than the FBIL levels, unlike 1.5-12 bps seen at the last OMO auction on Monday. Some banks said the price of the 6.45%, 2029 gilt may be lower than the indicative price for Thursday as this was the first time the RBI had offered to buy the erstwhile 10-year benchmark gilt issued in 2019, and with holdings widespread, banks may have been aggressive in tendering the bond.

 

Though higher-than-expected cut-off prices may push up gilts in the secondary market, traders said gains are unlikely to be sustained as long as oil prices put pressure on domestic macroeconomic fundamentals and the rupee. The domestic currency fell to a record low of 92.4750 a dollar intraday. Moreover, caution before the weekend may lead to fresh selling pressure by Friday's close unless the RBI buys bonds in the secondary market, dealers said.

 

At 1315 IST, the turnover in the gilt market was INR 117.60 billion, less than half of INR 303.55 billion at 1330 IST Thursday, 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 6.63-6.70% for the rest of the day.  (Aaryan Khanna and Diksha Tripathy)

---

India Gilts: Dn on oil price rise; OMO cut-offs seen higher than FBIL prices

 

	0954 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	98.63	98.65	98.59	98.65	98.69
YTM (%)	6.6758	6.6726	6.6813	6.6729	6.6666

 

MUMBAI--0954 IST--Prices of government bonds were down Friday due to an overnight rise in crude oil prices, dealers said. Traders refrained from aggressive bets in the secondary market due to focus on the INR-500-billion open market operations auction at 0930-1030 IST, they said. Cut-off prices at the auction are seen higher than Thursday's indicative levels, dealers said. Losses were limited as traders expect the Reserve Bank of India to purchase gilts on-screen, they said.  

 

At the open market operation auction, traders will offer the papers to the RBI at prices higher than those indicated by Financial Benchmarks India Pvt. Ltd. Thursday, after the central bank set cut-off prices much more than expected at the OMO auction Monday, they said. Traders expect aggressive offers for the 6.45%, 2029 paper. Public sector banks are likely to offer the 7.41%, 2036 paper, dealers said. Insurance companies are seen tendering the 7.06%, 2046 paper and the 7.62%, 2039 gilt, dealers said. Most of the papers are 'in-the-money' or profitable as these are erstwhile benchmark gilts, they said. 

 

Brent crude oil futures for May delivery rose to INR $100.86 per barrel at 0900 IST, up over 3% from the end of gilt market hours Thursday. Traders are closely tracking any developments in the military conflict in West Asia and its impact on crude oil prices, dealers said. However, losses were limited as traders expect the RBI to buy gilts in the secondary market Friday. These expectations were fuelled after the 'Others' segment of gilt market participants, which includes insurers, pension funds and the central bank, net bought gilts worth INR 44.71 billion on Thursday, net purchasing gilts worth INR 110.66 billion in the secondary gilt market so far this week till Thursday, as per data from Clearing Corp. of India.

 

"I think it (the yield on the 10-year benchmark 6.48%, 2035 bond) will be range-bound today (Friday) even if the cut-offs (prices) are better than expected," a dealer at a private sector bank said. "I do not expect the yield on the 10-year benchmark bond to fall below 6.65%."

 

At 0954 IST, the turnover in the gilt market was INR 15.35 billion, lower than INR 53.25 billion at 0930 IST Thursday, 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 6.63-6.70% during the rest of the day.  (Janwee Prajapati)

---

India Gilts: Seen down on overnight rise in oil prices; OMO buy result eyed

 

NEW DELHI – Government bond prices are seen opening lower Friday as Brent crude for May delivery was above $101 a barrel in Asian trade, rising more than 4% since 1700 IST. The result of the Reserve Bank of India's open market operation auction to buy bonds will likely lend cues to gilt prices during the day, dealers said. Bonds may face pressure towards the close as well as traders trim their holdings to limit risk from developments in West Asia over the weekend.

 

The yield on the 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.63-6.72% Friday, after ending at INR 98.69, or 6.67% yield Thursday. Bonds ended sharply lower Thursday as crude oil prices and US Treasury yields rose, with some disappointment on the bonds the RBI picked for its OMO auction. Losses were limited by replacement demand from banks and the speculated purchases from the central bank.

 

The RBI will buy the following bonds at the auction at 0930-1030 IST Friday:

--the 6.45%, 2029 bond,

--the 7.95%, 2032 bond,

--the 6.79%, 2034 bond,

--the 6.64%, 2035 bond,

--the 7.41%, 2036 bond, 

--the 7.62%, 2039 bond,

--and the 7.06%, 2046 bond.

 

Banks are likely to bid at prices higher than the indicated levels on Financial Benchmarks India Ltd. Thursday as the RBI is seen fulfilling the notified amount no matter how expensive the offers are, dealers said. The offers will not be aggressive as most banks are not holding the bond at a profit. The 2046 gilt will likely be offered to the RBI by life insurers, dealers said. 

 

Traders expect little impact of the CPI inflation print on gilt prices as February reading failed to change rate views, dealers said. India's CPI inflation was at 3.21% in February, up from 2.74% in January and 3.1% expected in an Informist Poll. Bond traders expect the RBI's Monetary Policy Committee to hold the repo rate at 5.25% through 2026-27 (Apr-Mar).

 

The RBI's speculated presence in the secondary market may also continue if prices fall sharply, especially approaching the psychologically crucial 6.70% yield on the 10-year benchmark bond, dealers said. 'Others' – a segment that includes the RBI, insurers and provident funds – net purchased gilts worth INR 44.71 billion Thursday, Clearing Corp. of India data showed. Traders await data on the central bank's secondary market activity for the week ended Mar. 6 near the close of trade Friday. The data is expected to show secondary market purchases of near INR 500 billion.  (Aaryan Khanna)

 

End

 

US$1 = INR 92.46

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

 

With inputs from Diksha Tripathy

Edited by Saji George Titus

 

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

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.