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Informist, Wednesday, Apr. 15, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds surged Wednesday, tracking a fall in crude oil prices and reports that the US and Iran have agreed in principle to extend the two-week ceasefire that ends Apr. 22, dealers said. Bond prices rose as risk appetite improved on signs of easing hostilities, with traders covering short bets along with buying at yields seen as attractive, they said.

 

The 10-year benchmark 6.48%, 2035 bond ended at INR 97.34, sharply up from INR 96.85 Monday. Its yield ended at 6.8662%, down 7 basis points from 6.9395% Monday. The turnover in the 10-year bond was INR 427.55 billion on Wednesday, accounting for 63% of the INR 673.80 billion turnover in the government securities market. The trade in the bond had accounted for 69% of the total turnover Monday. The total turnover in the secondary market surged Wednesday from INR 562.60 billion Monday. The five-year 6.01%, 2030 gilt ended at INR 98.48, up 32 paise from Monday's close. Indian financial markets were shut on Tuesday for Ambedkar Jayanti.

 

"All market participants are buying after someone floated the news that the ceasefire will be extended," a dealer at a public sector bank said. Bond prices rose further near the end of trade after the Associated Press reported that the US and Iran had agreed to extend the ceasefire, citing regional officials.

 

Traders, especially insurers and mutual funds, bought gilts throughout the session Wednesday in the secondary market at levels seen as attractive, dealers said. The levels were seen as lucrative because most market participants expect the yield on the 10-year benchmark gilt to fall further to 6.80% in the near-term. The fresh purchases were largely made by mutual funds with cash inflows at the beginning of the financial year 2026-27 (Apr-Mar), dealers said. Some purchases in longer-term gilts were made by insurance companies which could not get their hands on their intended amount of stock at the state bond auction Monday, dealers said.  

 

"Insurers and mutual funds have that kind of appetite where they can buy more (gilts) to add to their portfolio(s) at this point," a dealer at a private-sector bank said.   

 

Sentiment improved amongst gilt traders on hopes of an agreement between the two warring nations, which kept bond prices up since the beginning of the trading session Wednesday. Brent crude oil for June delivery was $96.10 per barrel at 1700 IST, down from $101.91 per barrel at the end of Indian market hours Monday.

 

Foreign banks, which have been net buyers of gilts in the last two sessions, covered their short positions, dealers said. Friday and Monday, foreign banks have cumulatively net bought gilts worth INR 43 billion in the secondary market, as per data from Clearing Corp. of India Ltd. Gilts worth INR 1.56 trillion mature this month, leading to replacement demand in the secondary market, especially from foreign banks, dealers said.

 

Cut-off yields on Treasury bills at the auction Wednesday were lower than expected as mutual funds bid aggressively amid surplus liquidity at the beginning of FY27, which pushed up bond prices. The cut-off yield on the 91-day T-bill was 5.21%, sharply lower than 5.30% in an Informist Poll. The cut-off yields on the 182-day and 364-day T-bills were 5.48% and 5.59%, against estimates of 5.50% and 5.60%, respectively. 

 

Bond prices briefly erased some gains during the day after the WPI inflation print for March came in higher than expected. WPI inflation rose to a 38-month high of 3.88% in March, compared with 3.60% estimated in an Informist Poll, amid oil supply disruptions due to the war in West Asia. This weighed on bond prices, dealers said. 

 

Gains on bond prices were limited as some traders booked profits, dealers said. "It (profit booking by traders) might be the case actually, because there is so much uncertainty in the market due to (West Asia) war that people want to exit when there is some positive sentiment," a dealer at another private sector bank said. "Today is the right time for them (traders)."

 

A fall in US Treasury yields also helped maintain the momentum in the bond market, dealers said. A similar fall in overnight indexed swap rates also pushed up bond prices. The one-year and five-year OIS rates closed 8 basis points and 3 bps lower, respectively, pushing bond prices up. 

 

There were no trades using the RBI's wholesale e-rupee pilot. The instrument has remained out of use since February.

 

OUTLOOK

Thursday, bond prices may track movement in crude oil prices and developments related to the conflict in West Asia, dealers said. Traders are betting that the US-Iran ceasefire will continue to hold and the yield on the 10-year benchmark bond is unlikely to rise above 7.00%, making current levels attractive for buying bonds, dealers said. Traders may also track US Treasury yields after US President Donald Trump said he would have to fire US Federal Reserve Chair Jerome Powell if the latter does not leave the Fed at the end of his term next month.

 

Traders have mixed views on rate-sensitive short-term bonds, with some preferring these tenures for their lucrative yield spreads over overnight borrowing rates, while others fear the RBI is likely to drain liquidity through a variable rate reverse repo auction this week amid surplus liquidity. Some dealers do not expect another VRRR until the one conducted Friday is reversed.

 

The movement in overnight indexed swap rates and the rupee may also influence gilts. The yield on the 10-year benchmark 6.48%, 2035 gilt is seen at 6.80-7.00%.

 

	WEDNESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	97.3400	6.8662%	96.8450	6.9395%
6.33%, 2035	97.4500	6.7097%	97.2250	6.7437%
6.01%, 2030	98.4800	6.4199%	98.1650	6.5062%
6.68%, 2040	95.4375	7.1960%	94.9025	7.2588%
6.90%, 2065	91.4500	7.5862%	91.0500	7.6211%

 

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India Gilts: Rise more on report of US, Iran agreeing to extend truce

 

	1627 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.24	97.39	97.07	97.11	96.85
YTM (%)	6.8810	6.8588	6.9062	6.9002	6.9395

 

MUMBAI--1627 IST--Prices of government bonds rose further after The Associated Press reported that the US and Iran had agreed in principle to extend the two-week ceasefire that ends Apr. 22, dealers said. Citing regional officials in West Asia, the report said the two sides were making progress on peace talks. 

 

"(Bonds have risen) because of the extension of ceasefire between Iran and US," a dealer at a private-sector bank said. Prices remained sharply up as some foreign banks covered short positions in the secondary market, dealers said. However, the yield on the 10-year benchmark 6.48%, 2035 bond failed to sustain a fall below the 6.88% level as traders took profits after the yield hit the day's low of 6.8588%, the lowest since Mar. 25.

 

For the rest of the day, the yield on the 10-year benchmark bond is seen moving in the range of 6.85-6.90%. At 1630 IST, the turnover in the gilt market was INR 602.25 billion, significantly higher than INR 494.50 billion at 1630 IST Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. Indian financial markets were shut Tuesday for Ambedkar Jayanti. (Diksha Tripathy and Janwee Prajapati)

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India Gilts: Erase some gains as India Mar WPI inflation higher than view

 

--Dealers: Gilts erase some gains after Mar WPI inflation higher than view

 

	1401 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.18	97.32	97.07	97.11	96.85
YTM (%)	6.8906	6.8699	6.9062	6.9002	6.9395

 

MUMBAI--1401 IST--Prices of government bonds erased some of their earlier gains after India's wholesale inflation for March was higher than expected, reflecting the impact of oil supply disruptions due to the war in West Asia, dealers said. WPI inflation for March was 3.88%, higher than an Informist Poll estimate of 3.60%.

 

The fall was limited and bond prices remained sharply up as foreign banks covered their short positions in the secondary market, dealers said. Over the past two trading sessions, foreign banks have net bought gilts worth INR 43 billion in the secondary market, as per data from Clearing Corp. of India Ltd. Gilts worth INR 1.56 trillion mature this month, leading to replacement demand in the secondary market, especially from foreign banks, dealers said.

 

Some fresh purchases by insurance companies and mutual funds at levels seen to be attractive helped bond prices, dealers said. Current yields are seen as lucrative to buy gilts as the yield on the 10-year benchmark 6.48%, 2035 gilt is seen falling to 6.80% in the near term, they said. Insurance companies, which are part of the "Others" category of bond market participants, are likely to have bought gilts in the secondary market to add to their portfolios, they said. Mutual funds also made fresh purchases Wednesday because of the availability of surplus cash.

 

"Traders are sitting on light positions, so some fresh buying is there in the market today (Wednesday), maybe insurers and mutual funds are there (in the secondary market to buy gilts)," a dealer at a private-sector bank said. "I don't think public-sector banks are here because they have been selling." 

 

Cut-off yields at the Treasury bill auction were lower than expectations due to surplus liquidity and aggressive bids from mutual funds, dealers said. The cut-off yield on the 91-day T-bill was 5.21%, down from an Informist Poll of 5.30%. The cut-off yields on the 182-day and 364-day T-bills were 5.48% and 5.59%, against estimates of 5.50% and 5.60% respectively. 

 

The "Others" segment of bond market participants, which includes insurance companies, provident funds, and the Reserve Bank of India, was the largest net buyers of gilts Monday with purchases worth INR 25.90 billion, according to data on the NSE Cogencis WorkStation. Most traders expect these purchases to have been made by insurance companies and not the RBI.

 

"It is highly unlikely that it was RBI because now there is a positive sentiment in the market. Plus, they (RBI) did not intervene (buy gilts on-screen) at 7% level (when the yield on the 10-year benchmark gilt was 7.00%) so now why would they do that?" a dealer at a public-sector bank said.

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen moving in the range of 6.85-6.95%. At 1401 IST, the turnover in the gilt market was INR 435.90 billion, higher than INR 304.15 billion at 1330 IST Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform. Indian financial markets were shut Tuesday for Ambedkar Jayanti.  (Diksha Tripathy)

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India Gilts: Sharply up on fall in crude oil prices, US Treasury yields

 

--Dealers: Gilts rise as crude, US ylds fall on hopes of fresh US-Iran talks 

 

	0930 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.23	97.28	97.11	97.11	96.85
YTM (%)	6.8832	6.8751	6.9002	6.9002	6.9395

 

MUMBAI--0930 IST--Prices of government bonds were up significantly Wednesday due to a sharp fall in prices of crude oil and US Treasury yields, dealers said. Fall in overnight indexed swap rates and fresh purchases by traders also pushed up bond prices, they said.

 

Brent crude oil futures for June delivery were near $95 per barrel at 0930 IST, down from $102 per barrel at 1700 IST Monday, on hopes of fresh peace talks between the US and Iran. The yield on the 10-year benchmark US Treasury note fell to 4.25% as at 0930 IST, from 4.34% at 1700 IST Monday. Indian financial markets were shut Tuesday for Ambedkar Jayanti. At 0930 IST, the one-year and five-year OIS rates were each down almost 7 basis points to 5.78% and 6.29%, respectively, from 5.84% and 6.35% Monday.

 

"Crude (oil prices) and 10-year UST (yield on 10-year benchmark US Treasury note) will be closely watched today. These are the two factors primarily driving the market today," a dealer at a private-sector bank said.

 

Public sector banks, insurance companies, and mutual funds bought gilts in the secondary market in early trade to add to their portfolios, dealers said. The fresh purchases by market participants helped bond prices to rise further. "Insurance companies have been buying bond since Monday," a dealer at a public-sector bank said.

 

The 'Others' segment of bond market participants, which includes insurance companies, provident funds, and the Reserve Bank of India, were the largest net buyers of gilts on Monday, according to Clearing Corp. of India data. These purchases were made mostly by insurance companies which could not get their intended amount of stock at the state bond auction Monday, dealers said.

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen moving in a range of 6.85-6.93%. At 0930 IST, the turnover in the gilt market was INR 85.55 billion, higher than INR 63.25 billion at 0930 IST Monday, according to data on the RBI's Negotiated Dealing System-Order Matching platform.  (Diksha Tripathy)

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India Gilts:Seen up as crude oil prices fall on hopes of US-Iran peace talks

 

MUMBAI – Prices of government bonds are seen opening higher Wednesday tracking a fall in Brent crude oil prices, dealers said. Brent crude oil futures for June delivery and the US Treasury yields fell due to the possibility of another round of peace talks between the US and Iran in the next two days. Traders are likely to purchase gilts at levels seen attractive, dealers said. 

 

The yield on the 10-year benchmark 6.48%, 2035 bond is expected to open at around 6.90% and is seen in a range of 6.80-7.00% Wednesday, dealers said. The 6.48%, 2035 bond had ended at INR 96.85, or 6.9395% yield, Monday. Indian markets were shut Tuesday on account of Ambedkar Jayanti.

 

At 0800 IST, the benchmark 10-year US Treasury yield was 4.25%, down more than 11 basis points from levels at 1700 IST, Monday.

 

Traders will also assess data from Clearing Corp. of India, which showed the 'Others' segment of bond market participants--which includes insurance companies, provident funds, and the Reserve Bank of India-—was the largest net buyer of gilts Monday with purchases worth INR 38.55 billion. Some traders speculate the RBI purchased gilts on-screen as more than half of the total trade volume was recorded in the 10-year benchmark bond. 

 

Bond prices are likely to open higher after Brent crude oil prices fell below the key level of $100 per barrel on hopes that negotiations between the US and Iran are likely to resume. US Vice President J.D. Vance said the country would normalise economic ties with Iran if it "acts like a normal country," adding that US President Donald Trump's core policy is to stop Tehran from obtaining a nuclear weapon. Brent crude oil for June delivery was at $95.18 per barrel at 0800 IST, down from $102.27 per barrel at the end of Indian market hours Monday.   

"We have this ceasefire that's in place, I think it's six or seven days old, this ceasefire is holding," Vance said. "The president doesn't want to make a small deal, he wants to make the grand bargain."

 

Traders are betting that the US-Iran ceasefire will continue to hold and the yield on the 10-year benchmark bond is unlikely to rise above 7.00%, making current levels attractive to buy bonds, dealers said. Though Iran and the US failed to make headway in negotiations over the weekend, the geopolitical risk is already priced into bonds, they said. 

 

There were no surprises in India's CPI inflation data for March, released Monday, reinforcing bets that the RBI's Monetary Policy Committee is unlikely to find any reason to raise the repo rate in June, dealers said. Most traders say that the 10-year benchmark 6.48%, 2035 bond yield has scope of falling till 6.80%, after a tame inflation print in March.

 

Traders have mixed views on rate-sensitive short-term bonds, with some preferring these tenures due to their lucrative yield spreads over overnight borrowing rates, while others fear the RBI is likely to drain liquidity through another variable rate reverse repo auction amid surplus liquidity, they said. Some traders are wary of the MPC's commentary, after the central bank conducted a VRRR Friday, a few days after Governor Sanjay Malhotra had seemingly indicated that the RBI would give banks liquidity comfort in times of uncertainty. The movement in overnight indexed swap rates and the rupee may also influence gilts.  (Janwee Prajapati)

 

End

US$1 = INR 93.37

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

 

Edited by Saji George Titus

 

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