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Informist, Monday, May 11, 2026

 

By Diksha Tripathy 

 

MUMBAI – Prices of government bonds ended sharply lower on Monday as traders sold gilts due to low risk appetite amid fears of further escalation in the West Asia war, dealers said. Bond prices were also down due to depreciation of the rupee, they said. Some intraday purchases by traders prevented further fall in bond prices, dealers said. The volume in the market was lower than on Friday as some traders remained on the sidelines amid lack of clarity over an end to the US-Iran war.    

 

The total turnover in the government securities market was INR 500.25 billion at 1700 IST, a tad lower than INR 592.95 billion at the end of Indian gilt trading hours Friday. There was no trade using the RBI's wholesale e-rupee pilot Monday. This instrument has not been used since February.

 

The newly-issued 10-year 6.94%, 2036 bond ended at INR 99.71 or 6.9814% yield and traded between 6.97% and 7.00% yield during the day. The total volume in the new 10-year bond was INR 105.75 billion on the first day of trade since the RBI set its coupon at 6.94% at the auction Friday. Traders accumulated the bond at current levels as liquidity in the paper is expected to go up and the bond transitions to becoming the 10-year benchmark bond, dealers said. The 6.48%, 2035 bond ended at INR 96.24, sharply lower than INR 96.58 Friday, as Brent crude oil prices remained over $100 per barrel. The yield on the 10-year benchmark gilt ended at 7.0317%, up from 6.9809% Friday. 

 

Foreign banks likely sold bonds as oil prices remained above the crucial level of $100 per barrel. At 1700 IST, Brent crude oil futures for July were at $103.99 per barrel, down from $105.51 per barrel at 0900 IST, but higher than $100.46 per barrel at 1700 IST Friday. Brent crude oil prices rose over the weekend to almost $106 per barrel as the US and Iran failed to reach a peace agreement to end the war. Indian financial markets were shut on Saturday.

 

On Monday, some traders remained on the sidelines due to lack of domestic cues, dealers said. Traders also assessed Prime Minister Narendra Modi's advisory on the West Asia war. Modi on Sunday urged Indian citizens to cut down on the use of petrol and diesel amid the ongoing energy crisis stemming from the war in West Asia. PM Modi's remarks raised concerns about the extent of disruption in the oil supply chain, dealers said. Fears of further escalation in the West Asia war also pulled down bond prices, they said.  

 

"Everyone is running to sell (bonds) at the moment," a dealer at a private sector bank said. "(The US-Iran) war is weighing on bond prices. Higher crude (oil) prices are a big concern for the market. Till it (Brent crude oil price) comes down to $90 per barrel, (the) yield (on the 10-year benchmark bond) will remain near 7%."

 

Depreciation of the rupee also weighed on bond prices, dealers said. The rupee posted its worst single-day fall in over six weeks and settled at a record closing low of 95.3100 a dollar Monday. Prime Minister Narendra Modi's comments Sunday, urging citizens to conserve foreign exchange, also weighed on the Indian unit. Traders see the fall of the rupee as another key challenge for the market apart from elevated crude oil prices, dealers said.   

 

The fall in bond prices was limited due to some intraday buying by traders, dealers said. The 10-year benchmark 6.48%, 2035 bond yield did not rise above 7.05% as some traders likely covered their short positions before the liquidity in the bond falls, dealers said. 

 

"Some intraday buying is what kept the levels under control," a dealer at another private sector bank said. "Some traders became active to cover short bets also in the benchmark 10-year segment, which also helped your bond prices."   

 

Bond prices will take cues from the result of the auction of state government securities Tuesday, when 11 states will raise INR 145 billion. Traders expect the auction to sail through due to its lower than indicated size, dealers said. The indicative calendar for state borrowing for the June quarter showed states would borrow INR 154.50 billion at the auction Tuesday. Demand for long-term bonds from insurers and banks is seen firm to add to their investment books, dealers said. However, higher-than-expected cut-off yields on bonds at the auction could pull down bond prices, dealers said.

 

OUTLOOK

On Tuesday, traders will track developments in the West Asia war and Brent crude oil prices, dealers said. The absence of a peace deal between the US and Iran kept Brent crude oil prices above $100 per barrel Monday. Any overnight development in the West Asia war could push bond yields higher, dealers said.  

 

Traders will also track India's CPI inflation data for April, due at 1600 IST Tuesday. The CPI inflation print is seen rising to a 15-month high of 3.8% in April from 3.4% in March, as per an Informist poll of 13 economists. Some traders expect the inflation print to come in at 4%. However, if the print breaches the 4% level and rises substantially to near 4.5% or above, it might bring down bond prices, dealers said. 

 

Any major sign of an end to the war could pull Brent crude oil prices to near $90 a barrel, which may prompt the 10-year benchmark gilt yield to fall to 6.85%. Further fall in the bond yield is not expected as CPI inflation is likely to remain high through the year, which will prompt traders to take profits at that yield level, dealers said. However, any sign of escalation in the West Asia war could push the 10-year bond yield back above 7.00%, dealers said. Traders will also track the movement of overnight indexed swap rates and the rupee, they said. The yield on the 6.48%, 2035 bond is seen in a range of 6.95-7.05% Tuesday.

 

Traders see the 6.94%, 2036 bond at 6.90-6.99% on Tuesday if there are no new developments in the West Asia war. However, any signs of de-escalation would pull down the yield on the new 10-year bond to 6.90%, dealers said. Any escalation in the US-Iran war could push the yield to 6.99% levels, they said.  

 

	MONDAY		FRIDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.2425	7.0317%	96.5800	6.9809%
6.33%, 2035	96.0300	6.9309%	96.3425	6.8824%
6.36%, 2031	98.32	6.7754%	98.6525	6.6918%
6.68%, 2040	94.2300	7.3408%	94.6400	7.2919%
6.90%, 2065	90.5775	7.6622%	91.1000	7.6163%

 

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India Gilts: Stay sharply down amid uncertainty over US-Iran peace deal

 

	1605 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.24	96.45	96.14	96.45	96.58
YTM (%)	7.0321	7.0200	7.0468	7.0227	6.9809

 

MUMBAI--1605 IST--Prices of government bonds remained down on a lack of clarity over the end of the US-Iran war, dealers said. Bond prices were also down because of the depreciation of the rupee, they said. The rupee fell to the day's low of 95.32 per dollar, down over 80 paise from Friday's close.

 

At 1605 IST, turnover in the gilts market was INR 439.35 billion, down from INR 537.10 billion at 1635 IST Friday, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. Traders do not expect the 10-year benchmark 6.48%, 2035 bond yield to rise above 7.05% as traders will likely cover their short positions at these levels, dealers said. The new 10-year 6.94%, 2036 bond was the second most traded bond after the 6.48%, 2035 gilt and the 6.68%, 2040 bond, the CCIL data showed. The new 6.94%, 2036 bond was traded at 6.98% yield and the total turnover was INR 96.75 billion at 1605 IST. Traders see the new 10-year bond's yield in a range of 6.96-7.04%.

 

Bond prices remained sharply down after falling earlier in the day as traders refrained from building position as they awaited more clarity on the progress of the peace negotiations between the US and Iran, with the ceasefire in West Asia seen to be fragile, dealers said. Traders also assessed Prime Minister Narendra Modi's remarks on the energy crisis stemming from the war, dealers said. Some said Modi's comments signalled the possibility of an increase in retail fuel prices and this weighed on market sentiment. "Modi's comment is little bearish for the market and the government has acknowledged that geopolitical tension is affecting the market," a dealer at a state-owned bank said.

 

Dealers expect the CPI inflation to be at 3.6-3.8%. An Informist Poll of 13 economists has pegged CPI inflation in April at a 15-month high of 3.8%, up from 3.4% in March. The CPI inflation data will be released 1600 IST Tuesday. A higher-than-expected inflation print for April will put pressure on bond prices, they said. "If there will be no positive update on the war, then the crude prices can again go to 120-125 level ($120-$125 per barrel), it will be a big shock for the market," a dealer at another public-sector bank said.

 

For the rest of the day, the yield on the 10-year benchmark bond is seen in the 7.00–7.05% range. If conditions remain the same, then the yield on the 10-year benchmark bond could surpass the 7.05% level, dealers said.  (Durgesh Nandan)

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India Gilts: Remain sharply dn as traders trim position on weak risk appetite

 

	1215 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.27	96.45	96.14	96.45	96.58
YTM (%)	7.0283	7.0200	7.0468	7.0227	6.9809

 

MUMBAI--1215 IST--Prices of government bonds remained sharply down as traders trimmed their bond holdings due to lack of risk appetite amid uncertainty over the end of the US-Iran war, dealers said. Traders refrained from placing aggressive bets ahead of the CPI inflation print, which will be released at 1600 IST Tuesday, dealers said. 

 

At 1215 IST, turnover in the gilts market was INR 241.10 billion, slightly higher than INR 222.75 billion at 1230 IST Friday, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. Some traders shifted from the 10-year benchmark 6.48%, 2035 bond to the new 10-year 6.94%, 2036 bond, dealers said. The new 6.94%, 2036 bond was traded at 6.98% yield at 1215 IST, and had a total secondary market trade volume of INR 54.10 billion, up from 14.40 billion at 0950 IST. Traders see the new 10-year bond yield in a range of 6.96-7.02% for the rest of the day.  

    

Traders likely sold gilts due to fear of escalation in the West Asia war, which weighed on bond prices Monday, dealers said. Foreign banks, which usually act on the movement of oil prices, likely sold bonds Monday as Brent crude oil prices rose over the weekend to over $105 per barrel from $100.46 a barrel at the end of Indian gilt market trading hours Friday, dealers added. Some traders remained on the sidelines Monday after Prime Minister Narendra Modi expressed concerns about the ongoing energy crisis in the country stemming from the US-Iran war.  

 

"Sentiment in the market is very negative," a dealer at a primary dealership said. "High chances of petrol and diesel price hikes are adding to it. People who are stuck with positions are now getting rid of them because truce is not happening between the two countries (US and Iran) and now PM (Narendra Modi) has also expressed concerns regarding imports." 

 

Traders refrained from placing aggressive bets before the release of the domestic CPI inflation print. Traders expect CPI inflation to be closer to 4%, but still within the RBI's comfort band of 2-6%. However, if the April inflation data is substantially higher than the expected 4% level, then it will pull down bond prices, they said. An Informist Poll of 13 economists pegs CPI inflation at a 15-month high of 3.8% in April, up from 3.4% in March. 

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.98–7.05% range. Any major escalation in the West Asia war could push the yield on the 10-year bond to above 7.05%, dealers said.  (Diksha Tripathy)

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India Gilts: Sharply down as Brent crude oil prices rise to over $105/bbl

 

	0950 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.21	96.45	96.19	96.45	96.58
YTM (%)	7.0374	7.0200	7.0393	7.0227	6.9809

 

MUMBAI--0950 IST--Prices of government bonds were sharply down due to a rise in Brent crude oil, which rose after Iran and the US failed to reach a peace agreement to end the war over the weekend, dealers said.

 

At 0950 IST, turnover in the gilt market was INR 88.30 billion, higher than INR 39.65 billion at 0930 IST Friday, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. Some traders shifted from the 10-year benchmark 6.48%, 2035 bond to the new 10-year 6.94%, 2036 bond, dealers said. The new 10-year bond had a total secondary market trade volume of INR 14.40 billion at 0950 IST.

       

The 6.48%, 2035 bond opened at INR 96.45, down 13 paise from Friday, and fell by almost 20 paise in early trade to INR 96.26 at 0930 IST, dealers said. Traders said the $ 5-per-barrel rise in Brent crude oil prices was the key factor driving down bond prices. 

 

"Crude (oil) prices are up, and that is reflecting in (bond) prices," a dealer at a state-owned bank said. "Plus, some selling also happened in early trade because the market was expecting an even lower opening level."

  

Brent crude prices rose nearly $5 a barrel Monday after the US and Iran failed to agree on a peace proposal drafted by Washington. The Strait of Hormuz remained closed, keeping global energy supplies tight. At 0930 IST, Brent crude oil for July delivery was at $105.62 per barrel, up from $100.46 at the end of Indian gilt trading hours Friday.

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.98–7.05% range. Any major escalation in the West Asia war could push the yield on the 10-year bond to above 7.05%, dealers said.  (Diksha Tripathy)

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India Gilts: Seen dn as oil rise; Trump rejects Iran response to peace plan

 

MUMBAI – Government bond prices are likely to open lower Monday after fresh developments in the US-Iran conflict drove oil prices higher, dealers said. Traders are expected to stay on the sidelines and avoid building aggressive positions amid uncertainty over a potential peace agreement between the two warring nations and ahead of India's inflation data scheduled for release Tuesday, they said.

 

The yield on the 10-year benchmark 6.48%, 2035 bond is expected to open near 6.99% and is seen in the 6.90-7.00% range during the day, dealers said. Some traders who bought bonds around 7.00% on the 10-year benchmark yield are likely to book profits on their positions, while some others are likely to shift to the new 6.94%, 2036 bond, which will also weigh on the 6.48%, 2035 bond prices, dealers said. Friday, the 10-year benchmark bond ended at INR 96.58, or 6.9809% yield. Gilt prices ended sharply lower Friday due to lack of certainty about the US and Iran arriving at a peace deal and amid elevated oil prices, dealers said. Bond prices fell further towards the end of trade as dealers trimmed their bond holdings due to lack of risk appetite.

 
Brent crude prices rose nearly $5 a barrel on Monday after the US and Iran failed to agree on a peace proposal drafted by Washington. The Strait of Hormuz remained largely closed, keeping global energy supplies tight. Hopes for an imminent end to the US-Iran conflict that would reopen oil transit through the strait faded after US President Donald Trump on Sunday dismissed Iran's response to the US proposal for peace talks as "unacceptable". At 0700 IST, Brent crude oil for July delivery traded at over $105 per barrel, higher than the key level of $100 per barrel at the end of Indian trading hours Friday.

Trump is scheduled to arrive in Beijing Wednesday and is expected to discuss the US-Iran conflict, along with other issues, with Chinese President Xi Jinping, according to media reports. The yield on US Treasury yields were at 4.39%, up almost 4 basis points from Friday, which will also weigh on bond prices.

  
Domestically, traders will start positioning ahead of India's CPI inflation data for April, scheduled for release at 1600 IST Tuesday. An Informist poll of 13 economists pegs CPI inflation at a 15-month high of 3.8% in April, up from 3.4% in March. Some traders anticipate a print closer to 4%. Traders also foresee a sharper increase in wholesale inflation, driven by oil supply disruptions, as the Centre is yet to raise retail energy prices. With state Assembly elections concluding last week, many traders expect the Centre to announce price hikes later this month.

Any major sign of an end to the war will lead to a drop in Brent crude prices toward $90 a barrel, which may push the 10-year benchmark gilt yield down to 6.85%, dealers said. However, traders don't expect yields to fall much further, as CPI inflation is likely to stay elevated through the year, prompting profit booking at that level. Traders will also watch overnight indexed swap rates and the rupee's movement throughout the day.  (Janwee Prajapati)

 

US$1 = INR 95.31

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

 

Edited by Avishek Dutta

 

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