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Informist, Monday, May 4, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended down in choppy trade Monday after Brent crude oil prices rose on reports of escalation in the West Asia conflict, dealers said. However, the fall was limited as traders covered short positions in the secondary market at levels seen as lucrative, with state-owned banks also stepping up purchases, they said.  

 

The 10-year benchmark 6.48%, 2035 government bond ended at INR 96.32, down from INR 96.35 Thursday. The yield on the bond ended at 7.0194%, above the psychologically crucial 7.00% mark for the second consecutive session. The gilt had ended at 7.0148% on Thursday. Money markets were shut on Friday for Maharashtra Day and Labour Day. 

 

Bond prices had opened higher as Brent crude for July delivery cooled during the long weekend, following US President Donald Trump's positive remarks on talks with Iran and a proposal to escort ships out of the Strait of Hormuz on a humanitarian basis. The contract fell to $108.44 per barrel at 0900 IST from $113.08 per barrel at 1700 IST Thursday. However, reports of Iranian attacks on a US warship and an oil carrier from the United Arab Emirates stoked fear of the conflict flaring up after being under a ceasefire since Apr. 8. The US military denied the claim from Iranian media that a US warship was hit. 

 

An intraday rise in US Treasury yields also weighed on bond prices, dealers said. The yield on the 10-year benchmark US Treasury note was at 4.41% at 1700 IST Monday, after settling at 4.37% Friday. The rise in the five-year overnight indexed swap rate to 6.67% by the end of Indian market hours from 

 

"Again, there is some news of escalation (in the West Asia war) today (Monday). Crude (oil prices) is up, and it will have a significant impact on the market," a dealer at a state-owned bank said. "I think this impact will be visible tomorrow (Tuesday) as well, at least in the early trade, if there is no positive development overnight. The 7.00% (the yield on the 10-year benchmark bond) is here to stay, it seems." 

 

As the yield on the 10-year bond remained near the key 7.00% level, state-owned banks made purchases in the secondary market, which limited the fall in bond prices, dealers said. Traders also rushed to cover short positions in the market as they expect the announcement of a new 10-year benchmark gilt at the weekly auction on Friday, they said. The liquidity in the current 6.48%, 2035 bond is expected to fall once the new benchmark gilt is announced and traded, hence traders preferred to cover bets Monday ahead of the auction announcement, dealers said.

 

The Centre usually issues a new bond in a particular tenure after the outstanding of the on-the-run paper tops INR 2 trillion to limit its one-time repayment burden. The 6.48%, 2035 bond's outstanding has reached INR 2.26 trillion, a record for a 10-year benchmark. After market hours, the government announced it would sell INR 340 billion of a new 10-year, 2036 gilt on Friday. 

 

Traders who had short-sold the 6.68%, 2040 bond ahead of its fresh supply at the auction Thursday were active in the market to cover their positions, dealers said. The 15-year benchmark bond had touched a high of INR 94.64 during the session Monday. However, with a rise in prices of Brent crude oil, the 6.68%, 2040 gilt ended almost flat at INR 94.39 or 7.3214% yield Monday.   

 

The results of the assembly elections in four states and a Union territory were also tracked by traders Monday. Some traders had expected that a win for the Bharatiya Janata Party in West Bengal would push bond prices up. Since the final results will be announced after the close of market hours, bond prices might rise in early Tuesday trade, dealers said. Trends from West Bengal showed the BJP-led coalition in the lead. The counting of votes for Assam, Kerala, Tamil Nadu, and the Union territory of Puducherry was also held on Monday.

 

"These things will take time to affect West Bengal and may be more relevant for equities," a fund manager at a mutual fund said. "But the bond market will also try to see how the new political realities will lead to changes in fiscal management, supply, and overall stability on the borrowing front due to these electoral wins."

 

The total turnover in the government securities market was INR 468.70 billion, down from INR 557.20 billion Thursday, data from Clearing Corp. of India Ltd. showed. There was no trade using the RBI's wholesale e-rupee pilot Monday. The instrument has been out of use since February.

 

OUTLOOK

Tuesday, bond prices will track developments in the conflict in West Asia and their impact on Brent crude oil prices, dealers said. Most traders do not expect a sharp reaction in bond prices from the Assembly election results, though the BJP's win in West Bengal may lead to some positive sentiment in bonds. Traders will also track the movement of overnight indexed swap rates and the rupee, they said.

 

The result of the auction of state government securities Tuesday is likely to lend cues to the gilt market, dealers said. Five states will raise INR 186 billion through the sale of bonds Tuesday. Traders expect the auction to sail through smoothly as the auction size is smaller than the INR 258 billion indicated in the calendar for state borrowing. However, if banks' poor risk appetite pushes up cut-off yields for state bonds, gilt prices may also fall, dealers said.  

 

Brent crude oil prices remained above the key level of $110 per barrel Monday at the close of Indian gilt market hours, which is likely to weigh on bond prices, dealers said. The yield on the 10-year benchmark is seen opening at 7.02%, they said. It is expected to rise to 7.05% if the US-Iran war escalates and crude prices shoot up to $115 per barrel, though firm appetite from state-owned banks and mutual funds is likely to keep it in check at that level, dealers said. The yield on the benchmark 10-year 6.48%, 2035 bond is seen in a range of 6.92-7.05%.

 

	MONDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.3200	7.0194%	96.3500	7.0148%
6.33%, 2035	96.1400	6.9132%	96.2400	6.8976%
6.01%, 2030	97.8700	6.5942%	97.9000	6.5855%
6.68%, 2040	94.3875	7.3214%	94.3800	7.3222%
6.90%, 2065	90.8500	7.6383%	90.7350	7.6484%

 

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India Gilts: Fall as oil shoots up on report of Iran attack on US warship

 

	1620 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.29	96.55	96.18	96.40	96.35
YTM (%)	7.0240	6.9849	7.0413	7.0074	7.0148

 

MUMBAI--1620 IST--Prices of government bonds fell due to a sharp rise in crude oil prices after a report said that Iran had attacked a US warship, dealers said. Brent crude for July delivery briefly shot up to over $113 a barrel from a low of below $107 per barrel, though gilts retraced some losses as the oil contract cooled to near $112 a barrel at 1620 IST. 

Al Jazeera, quoting Iran state media, reported Tehran has claimed that two missiles had hit a US warship which was attempting to cross the Strait of Hormuz. Traders had not expected a return to military conflict after a ceasefire between the US and Iran had held since Apr. 8.

 

"Everything is sharply up now: crude, US yields, OIS and even gilts (yields)," a dealer at a private-sector bank said. "There are reports floating around that Iran has attacked the US during its latest operation. It will be bad if war breaks out again."

 

Losses were limited in gilts across maturities as traders covered their short bets taken earlier in the day, especially in the 10-year benchmark 6.48%, 2035 gilt and the 15-year benchmark 6.68%, 2040 gilt, dealers said. Traders who had short sold the 2040 bond ahead of its auction Thursday and were unable to cover their bets were doing so Monday, they said. Public-sector banks were also buying the 6.48%, 2035 bond as its yield topped the psychologically crucial 7.00% mark. 

Some traders expect election results for West Bengal, Kerala, Tamil Nadu and Assam, whose final results will be announced later in the day, to have an impact on bond prices. A win by the Bharatiya Janata Party, which is in power in the Centre, in West Bengal, a key Opposition bastion, may prove positive for gilt prices, dealers said. According to latest counts, the BJP was leading comfortably in the state and was past the majority mark.

 

"After the election results, we can expect a 10-15 paise rally in bond prices," a dealer at a public-sector bank said. "Other than that there won't be much impact in the bond market."

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.95–7.05% range. At 1620 IST, turnover in the gilt market was INR 445.00 billion, lower than INR 481.30 billion at 1630 IST Thursday, according to data from the RBI's Negotiated Dealing System–Order Matching platform. Indian financial markets were shut Friday for Maharashtra Day and Labour Day. (Durgesh Nandan)

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India Gilts:Up on PSU banks' buys, fall in oil prices; election results eyed
 

Informist, Monday, May 4, 2026

 

	1220 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.41	96.55	96.31	96.40	96.35
YTM (%)	7.0059	6.9849	7.0209	7.0074	7.0148

 

India Gilts: Up on PSU banks' buys, fall in oil prices; election results eyed

 

MUMBAI--1220 IST--Prices of government bonds remained up as state-owned banks made purchases in the secondary market at levels seen attractive, dealers said. An intraday fall in prices of Brent crude oil also supported bond prices, they said. However, some traders booked profit, as the yield on the 10-year benchmark gilt remained near 7.00%, which weighed on bond prices, dealers said.

 

Traders await the result of the assembly elections which could lend cues to the market, they said. A win for the Bharatiya Janata Party in West Bengal could push bond prices up, dealers said. Early trends in West Bengal showed the BJP-led coalition was in the lead. Three other states, including Assam, Kerala, and Tamil Nadu, and Union territory Puducherry, will also announce the results of the ‌elections held in April. 

 

"Election results are key today (Monday). The BJP's win could lead to the yield (on the 10-year 6.48%, 2035 bond) coming down to 6.96% level," a dealer at a public-sector bank said. "I think that is also the reason why PSUs (state-owned banks) are buying (bonds) today."

 

Some traders booked profits as they expect bond prices to fall amid uncertainty at the end of the West Asia war, dealers said. Any negative news on the war front could push the 10-year benchmark bond yield to 7.05% level, they said.

 

An intraday fall in Brent crude oil helped bond prices, dealers said. At 1220 IST, Brent crude oil futures for July delivery were at $107.78 per barrel, slightly down from $108.44 per barrel at 0900 IST, and significantly down from $113.30 per barrel at 1700 IST Thursday. Indian financial markets were shut Friday for Maharashtra Day and Labour Day.   

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.95–7.05% range. At 1220 IST, turnover in the gilt market was INR 191.50 billion, higher than INR 164 billion at 1230 IST Thursday, according to data from the RBI's Negotiated Dealing System–Order Matching platform. (Diksha Tripathy)

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India Gilts: Rise as crude oil prices, US Treasury yields ease

 

	0930 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.48	96.48	96.31	96.40	96.35
YTM (%)	6.9962	6.9954	7.0209	7.0074	7.0148

 

MUMBAI--0930 IST--Prices of government bonds were up tracking a fall in Brent crude oil prices and US Treasury yields, dealers said. However, bond prices had fallen briefly in early trade as market participants trimmed positions at levels seen as attractive, they said.       

 

Brent crude oil futures for July delivery were at $108.75 per barrel at 0930 IST, down from $113.30 per barrel at the end of Indian trading hours Thursday. Indian financial markets were shut Friday for Maharashtra Day and Labour Day. Brent crude oil prices fell after US President Donald Trump said the US plans to help ships that do not belong to warring nations to exit the Strait of Hormuz. Any developments in the US-Iran war will lend cues to gilt prices. 

 

A fall in US Treasury yields also supported bond prices, dealers said. The yield on the 10-year benchmark US Treasury note fell to 4.38% at 0930 IST as against 4.40% at the end of Indian gilt market hours Thursday. 

 

Traders await results of the Assembly elections in West Bengal, Tamil Nadu, Kerala, Assam, and Puducherry. The election results could impact bond prices, dealers said. "If BJP gets more seats in these states, the market will react positively to it. We can see the yield (on the 10-year benchmark 6.48%, 2035 bond) coming down by 2–3 basis points," a dealer at a private-sector bank said. Some dealers expect the impact of election results to be seen more on the equity market than the money markets. 

 

In early trade, market participants sold gilts in the secondary market at levels seen as attractive, which weighed on bond prices, dealers said. Traders expect the yield on the 10-year benchmark bond to hover near 7.00% amid uncertainty over the end of the US-Iran war, they said.

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.95–7.05% range. At 0930 IST, turnover in the gilt market was INR 27.70 billion, lower than INR 37.50 billion at the same time Thursday, according to data from the RBI's Negotiated Dealing System–Order Matching platform. (Diksha Tripathy)

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India Gilts: Seen tad up as crude oil prices fall on hopes of ease in supply

 

MUMBAI – Government bond prices are seen opening slightly higher Monday, tracking a fall in Brent crude oil price to below the key $110 per barrel level, dealers said. Crude oil prices eased after US President Donald Trump said the US Navy would guide stranded ships through the Strait of Hormuz, easing supply concerns amid the war in West Asia.     

 

The yield on the 10-year benchmark 6.48%, 2035 bond is expected to open around 7.00% and is seen in the 6.95-7.05% range during the day, dealers said. Market sentiment will remain under pressure amid uncertainty around the de-escalation in the US-Iran war, they said. Thursday, the 10-year benchmark bond ended at INR 96.35, or 7.0148% yield. Gilt prices had ended off the day's lows Thursday due to an intraday fall in Brent crude oil prices. Traders also covered short bets in the secondary market at levels seen as lucrative. Indian financial markets were shut on Friday for Maharashtra Day and Labour Day.

 

The US will begin an operation Monday to guide ships stranded in the Strait of Hormuz, Trump said in a post on Truth Social. He further added that "Project Freedom" would be launched Monday morning, noting that his representatives are in talks with Iran that could yield a "very positive" outcome for everyone. Iran, on the other hand, immediately called it a breach of the ceasefire. Brent crude oil prices fell to $108 per barrel at 0730 IST as global oil supply concerns eased. Brent crude oil price for July delivery was over $113 per barrel at the end of Indian trading hours Thursday. 

 

A fall in the benchmark 10-year US Treasury yield to 4.38% at 0600 IST, from 4.40% at 1700 IST Thursday, is also expected to help bond prices, dealers said. 

Back home, traders are worried that the government could hike petrol and diesel prices to help oil marketing companies, which are incurring losses as crude prices have surged sharply since the start of the war in West Asia. Higher pump prices would likely push CPI inflation toward the upper limit of the Reserve Bank of India's 2-6% tolerance band in 2026-27 (Apr-Mar). Swap rates already reflect expectations of multiple repo rate hikes in India during FY27 and beyond, dealers said. Bond prices will closely track any sharp movements in overnight indexed swap rates and in the rupee against the dollar, dealers said. Some traders are likely to place some short bets on the 10-year benchmark bond ahead of its fresh supply at the weekly gilt auction Friday, dealers said. However, some traders expect the government to auction a new 10-year bond, they said.   (Janwee Prajapati) 

 

US$1 = INR 95.09

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

 

Edited by Saji George Titus

 

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