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Informist, Thursday, Apr. 30, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended off the day's lows Thursday after Brent crude oil prices and US Treasury yields fell intraday, dealers said. Traders covered short positions in the secondary market at levels seen as lucrative, they said. However, some traders trimmed their risk exposure ahead of the extended weekend, which weighed on prices.   

 

The 10-year benchmark 6.48%, 2035 government bond ended at INR 96.35, down from INR 96.50 Wednesday. The yield on the bond ended above the psychologically crucial 7%-mark at 7.0148%, the highest closing level since Apr. 7. The gilt had ended at 6.9928% on Wednesday. Bond prices had opened sharply lower as Brent crude for June delivery surged past $120 per barrel overnight, hitting a fresh high since the war in West Asia began in February. Traders also placed short bets in the secondary market in early trade to make room for fresh supply ahead of the INR-290-billion gilt auction, dealers said. 

  

Brent crude oil futures for June delivery were at $113.30 per barrel at 1700 IST, down from $121.35 at 0900 IST and $114.64 per barrel at the end of gilt market hours Wednesday. During the day, the contract reached $126.41 per barrel, its highest level since Mar. 9, 2022.

 

"We (traders) don't know what is next for the market. At this point, everybody is confused about the range (for the yield on the 10-year benchmark 6.48%, 2035 bond)," a dealer at a state-owned bank said. "But one thing is for sure, this 7.00% yield is here to stay for some time, at least as long as there is no clarity on the (US-Iran) war."

 

The fall in bond prices was limited due to purchases by state-owned banks at levels seen as attractive, dealers said. Public-sector banks, with higher risk appetite at the beginning of the financial year, also placed aggressive bids at the auction of the 15-year 6.68%, 2040 gilt Thursday to add to their held-to-maturity portfolios, they said. Insurers and pension funds bid for the long-term paper at the auction, dealers said. 

 

"PSU banks (state-owned banks) were there at the auction, and they were expected to be there because at these levels they are getting a fabulous deal," a dealer at a primary dealership said.

 

Traders who could not get their intended stock at the auction covered short bets in the secondary market, which led to a reversal in price of the 15-year 6.68%, 2040 bond, dealers said. The 15-year benchmark bond ended 22 paise higher at INR 94.38 or 7.32% yield Thursday. 

 

Additionally, an intraday fall in the yield of the 10-year US Treasury note aided the recovery in bond prices. The 10-year US yield was at 4.40% at 1700 IST, down from 4.43% at 0900 IST but up from 4.36% at 1700 IST Wednesday. The total turnover in the government securities market was INR 557.85 billion, up from INR 474.80 billion Wednesday, data from Clearing Corp. of India Ltd. showed. There was no trade using the RBI's wholesale e-rupee pilot Wednesday. The instrument has been out of use since February.

 

OUTLOOK

Indian financial markets are shut on Friday for Maharashtra Day and Labour Day. On Monday, bond prices will track developments in the war in West Asia over the extended weekend and their impact on Brent crude oil prices, dealers said. Traders will also track the movement of overnight indexed swap rates and the rupee, they said.

 

Brent crude oil prices cooled Thursday at the close of Indian gilt market hours but still remained above the key level of $110 per barrel, which is likely to weigh on bond prices, dealers said. The yield on the 10-year benchmark is seen opening at 7.01%, they said. It is expected to rise above 7.05% if the US-Iran war escalates and crude prices shoot up to $120 per barrel. The yield on the benchmark 10-year 6.48%, 2035 bond is seen in a range of 6.98-7.05%.

 

	THURSDAY		WEDNESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.3500	7.0148%	96.4950	6.9928%
6.33%, 2035	96.2400	6.8976%	96.3000	6.8876%
6.01%, 2030	97.9000	6.5855%	97.8400	6.6009%
6.68%, 2040	94.3800	7.3222%	94.1600	7.3481%
6.90%, 2065	90.7350	7.6484%	90.6400	7.6568%

 

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India Gilts: Off lows as Brent falls intraday to $116/bbl; auction demand firm

 

	1538 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.30	96.31	96.01	96.23	96.50
YTM (%)	7.0224	7.0209	7.0661	7.0329	6.9928

 

	1538 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.68%, 2040
PRICE (INR)	94.29	94.29	93.60	93.80	94.16
YTM (%)	7.3330	7.3330	7.4156	7.3916	7.3481

 

MUMBAI--1538 IST--Prices of government bonds were off the day's lows as Brent crude oil for delivery in June fell from an intraday high of $126 per barrel to $116 per barrel. Tracking the fall in crude prices, the 10-year US Treasury yield inched lower and the rupee recovered some losses against the dollar. Better-than-expected cut-off prices set at the INR-290-billion gilt auction also aided the recovery in bond prices, dealers said. Bond prices remained down as traders trimmed their positions as they lack the risk appetite due to caution ahead of the long weekend, they said.

"Market is rallying, there's buying happening across the board. I think there's short squeeze in the auction paper also, its 12 paise up from yesterday (Wednesday's close)," a dealer at a private sector bank said. "Maybe crude moved as a precursor to some positive news, who knows."

 

At the gilt auction Thursday, the Reserve Bank of India set a cut off price of INR 93.59 and INR 96.33 on the 6.68%, 2040 and 7.43%, 2076 papers, respectively. This was higher than the market estimate of INR 96.25 for the 7.43%, 2076 bond and INR 93.55 for the 6.68%, 2040 bond, according to the median of estimates of an Informist Poll.

 

Some traders covered their short positions placed ahead of the auction. Traders who could not get their hands on auction stock rushed to cover their short bets in the secondary market, which led to the rise in 6.68%, 2040 bond's price. Pension funds and insurance companies also bought the 50-year bond, dealers said.

 

Some traders expect the 10-year benchmark bond yield to close near 7.08% as traders will likely get rid of their positions ahead of the weekend, while others expect the yield to fall to 7.04% as they will cover their intraday short positions, dealers said.

 

For the rest of the day, yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.98–7.10% range. At 1521 IST, turnover in the gilt market was INR 392.25 billion, similar to INR 396.85 billion at the same time Wednesday, according to data from the RBI's Negotiated Dealing System–Order Matching platform.  (Janwee Prajapati)

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India Gilts: Remain sharply dn; auction demand seen firm on PSU banks buy

 

	1255 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.07	96.23	96.01	96.23	96.50
YTM (%)	7.0578	7.0329	7.0661	7.0329	6.9928

 

	1255 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.68%, 2040
PRICE (INR)	93.80	93.80	93.60	93.80	94.16
YTM (%)	7.3916	7.3916	7.4156	7.3916	7.3481

 

MUMBAI--1255 IST--Prices of government bonds remained sharply down due to the rise in crude oil prices and US Treasury yields overnight, along with caution ahead of the result of weekly gilt auction in a holiday-shortened week, dealers said. Gilts recovered some losses as Brent crude oil for June delivery fell to below $122 a barrel from $126.41 per barrel earlier in the day, they said.

 

"They (traders) do not want to keep their positions ahead of the weekend because nobody knows what Trump (US President Donald Trump) will do," a dealer at a state-owned bank said. "If war escalates, their portfolios will face consequences, so they are trimming their risks." Money markets are shut Friday for Maharashtra Day and Labour Day. 

 

Traders likely covered their short positions at the auction at 1030-1130 IST, dealers said. The government offered to sell INR 170 billion of the 6.68%, 2040 bond and INR 120 billion of the 7.43%, 2076 gilt at auction. State-owned banks likely bid for a large quantum of the 6.68%, 2040 gilt to add to their held-to-maturity books at levels seen lucrative, they said. Traders were expecting to pick up the bond at under 7.40% until Wednesday before the bond's price fell sharply Thursday due to the sharp rise in crude.

 

Contrary to the broad market view of firm demand at the weekly auction, a few dealers also flagged slight chances of devolvement in the 2040 bond as prices had fallen sharply Thursday due to the rise in crude oil prices. Most traders rubbished the view due to the demand to cover short sales.

 

"There are very slim chances (of devolvement) but it could happen because sentiment in the market is negative due to this (US-Iran) war," a dealer at a primary dealership said.

 

Life insurance companies and pension funds were looking to pick up the 50-year benchmark at the auction to add to their investment books and match their long-term liabilities, dealers said. The 2076 gilt offered its highest return since early April and was considered attractive by investors, they said. Traders avoided the bond as it was illiquid and also would lead to sharp mark-to-market swings in price in case of further deterioration in the global outlook. 

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.95–7.10% range. At 1255 IST, turnover in the gilt market was INR 187.35 billion, lower than INR 254.45 billion at 1330 IST Wednesday, according to data from the RBI's Negotiated Dealing System–Order Matching platform.  (Diksha Tripathy)

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India Gilts: Slump on rise in oil prices, US ylds; auction pressure weighs

 

--Gilts sharply down on overnight rise in crude, US yields 

--Gilts sharply down as poor demand seen for 6.68%, 2040 gilt at auction 

 

	1008 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.02	96.23	96.01	96.23	96.50
YTM (%)	7.0645	7.0329	7.0661	7.0329	6.9928

 

MUMBAI--1008 IST--Prices of government bonds slumped Thursday tracking an overnight rise in Brent crude oil prices and US Treasury yields, dealers said. Some traders also short-sold bonds in the secondary market in early trade ahead of the INR 290-billion weekly gilt auction at 1030-1130 IST, they said.     

 

Brent crude oil prices jumped overnight after US President Donald Trump asserted he would continue a blockade of the Strait of Hormuz and hinted at no peace deal with Iran unless it gives up nuclear material and alleged weapons. Brent crude oil futures for June delivery surged past $126 per barrel at 1000 IST, marking its highest level since March 2022, and sharply up from $114.64 per barrel at 1700 IST Wednesday.

 

The developments in West Asia war also pushed up the yield on the 10-year benchmark US Treasury note, which weighed on bond prices. The 10-year US Treasury yield was at 4.43% at 0915 IST, significantly up from 4.36% at the close of Indian gilt market hours Wednesday. 

 

Some traders also placed short bets in the secondary market in early trade to make room for fresh supply ahead of the INR-290-billion auction Thursday, dealers said. The government will sell INR 170 billion of the 6.68%, 2040 bond and INR 120 billion of the 7.43%, 2076 gilt at auction. For the long-term paper, the demand could come from insurance companies and pension funds, especially as the 50-year segment is seen to be insulated from global pressures and more reliant on supply-demand dynamics, which have been positive in April, they said. 

 

The uncertainty over the end of the West Asia war and large supply in the market are likely to dampen the demand for the 15-year benchmark at the auction, dealers said. However, traders are likely to cover their short sales in the bond taken in the lead-up to the fresh supply. A proxy for tracking short sales in a particular bond is the quantum of outstanding trades in the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 1000 IST showed trades worth INR 125.27 billion in the 6.68%, 2040 gilt, up from INR 100.49 billion Wednesday. The 2040 bond was the most-traded on the segment Thursday, even surpassing the 10-year benchmark 6.48%, 2035 gilt. 

 

"Banks will be there for the 15-year paper (at the auction) and around INR 60–70 billion will be covered by them," a dealer at a private-sector bank said. "But we will have to see how bidding will be to gauge what the market is thinking at this point when there is so much uncertainty around."

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.95–7.10% range. At 1008 IST, turnover in the gilt market was INR 69.10 billion, lower than INR 84.60 billion at 1030 IST Wednesday, according to data from the RBI's Negotiated Dealing System–Order Matching platform.  (Diksha Tripathy)

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India Gilts:Seen dn as crude tops $120/bbl, US ylds rise; caution on auction

 

MUMBAI – Government bond prices are seen opening lower Thursday tracking a rise in Brent crude oil prices after US President Donald Trump said he would not lift the blockade on the Strait of Hormuz, dealers said. A surge in US Treasury yields will also weigh on bond prices, they said. Traders expect the risk appetite to remain lower Thursday ahead of the extended weekend as Indian financial markets are shut Friday for Maharashtra Day and Labour Day holiday.

 

The yield on the 10-year benchmark 6.48%, 2035 bond is expected to open around 7.00% and is seen in a range of 6.90-7.05% during the day, dealers said. Wednesday, the 10-year benchmark bond had ended at INR 96.50, or 6.9928% yield. Gilt prices had ended off the day's lows in choppy trade Wednesday as traders covered short bets and state-owned banks made purchases in the secondary market at levels seen lucrative. Traders are likely to place some short bets Thursday with no signs of an end to the US-Iran war and uncertainty over reopening of the Strait of Hormuz, dealers said.

 

President Trump Wednesday asserted that the Strait of Hormuz blockade will continue, raising concerns about oil supply, according to media reports. He also made it clear the US will not make a peace deal with Iran "unless they (Iran) agree that there will be no nuclear weapons." This is seen as a warning to Iran on resumption of military strikes, which pushed Brent crude oil prices to over $122 per barrel, which later eased to near $120 per barrel at 0730 IST. Brent crude futures for June delivery were near $115-per-barrel level at the end of Indian trading hours Wednesday.

 

An overnight rise in US Treasury yields is seen weighing on bond prices, dealers said. The yield on the benchmark 10-year US Treasury note rose above 4.40% for the first time since March, tracking a rise in Brent crude June futures. At 0730 IST, the benchmark 10-year US Treasury yield was 4.42%, significantly up from 4.36% at 1700 IST Wednesday. The US Treasury yields were little changed as both the rate action and commentary at the Federal Open Market Committee were on expected lines. The committee on Wednesday kept the policy rates unchanged, with some members of the panel favouring a tighter tone on monetary policy as inflation risks increased. 

 

Back home, traders are likely to be cautious ahead of the weekly gilt auction as the large supply of bonds is likely to weigh on bond prices, dealers said. Traders expect the large supply of 6.68%, 2040 gilt to weigh on its cut-off price at the auction, with the cut-off yield on the 15-year benchmark gilt to be 3–5 basis points higher than the market level, they said. The government will sell INR 170 billion of the 15-year benchmark and INR 120 billion of the 7.43%, 2076 gilt at auction Thursday. Traders will also cover some of the short bets placed on the 15-year benchmark bond, dealers said. A proxy for tracking short sales in a particular bond is the number of trades in the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 0839 IST showed trades worth INR 100.49 billion in the 6.68%, 2040 gilt up from INR 88.39 billion Wednesday.

 

Banks are likely to place bids for the 15-year bond while demand is likely to be firm for the 7.43%, 2076 bond from insurance companies, dealers said. Mutual funds are likely to remain on the sidelines near the end of the month due to redemption pressure, they said. Traders will gauge the auction result for further cues. Bond prices will also track any significant movement of the rupee against the dollar and overnight indexed swap rates.  (Janwee Prajapati)

 

US$1 = INR 94.91

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

 

Edited by Saji George Titus

 

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