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Informist, Tuesday, May 12, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended lower Tuesday tracking a rise in Brent crude oil prices and depreciation of the rupee, dealers said. The fall in bond prices was, however, limited as some state-owned banks bought bonds at levels seen attractive and traders covered short bets, they said. The volume in the gilts market was slightly lower than Monday.

 

The total turnover in the government securities market was INR 490.75 billion at 1700 IST, slightly lower than INR 499.20 billion at the end of Indian gilt trading hours Monday. The total volume of the new 10-year bond was INR 66.75 billion at 1700 IST, lower than INR 105.75 billion Monday. The volume was low as traders remained cautious throughout the day amid uncertainty over a peace deal between the US and Iran, dealers said. There was no trade using the RBI's wholesale e-rupee pilot Tuesday. This instrument has not been used since February.

 

Tuesday, the 6.48%, 2035 bond ended at INR 96.15, lower than INR 96.24 Monday, while its yield ended at 7.0458%, up over 1 basis point from 7.0317% Monday. The newly-issued 10-year 6.94%, 2036 bond ended at INR 99.55, or 7.0033% yield, and traded in the range of 6.98%-7.01% yield during the day. Bond prices had opened lower due to an overnight rise in crude oil prices and US Treasury yields, but recovered most losses on purchases from state-owned banks at levels seen as attractive, dealers said. However, a weak risk appetite kept bond prices lower. 

 

Bond prices remained down throughout the day as Brent crude oil prices remained above $105 per barrel, dealers said. Brent crude oil futures for July delivery were at $107.40 per barrel at 1700 IST, higher than $105.12 per barrel at 0900 IST, and $104 per barrel at the end of Indian gilt trading hours Monday. 

 

Traders see the fall of the rupee as another key factor which weighed on bond prices, dealers said. The rupee fell sharply and ended at a record closing low of 95.63 against the dollar after hitting a record intraday low of 95.7400 a dollar on Tuesday.

 

"While crude (oil price) is an important factor, you can't let go of (the) rupee," a dealer at a private-sector bank said. "The rupee has been falling, and it's impacting bond prices also. It is actually adding to the worries of market participants now."  

 

Later in the day, bond prices recovered some losses briefly after the CPI inflation print for April was almost 4 basis points lower than traders' expectations, dealers said. India's inflation for April came in at 3.48% on year as against 3.4% in March, the government data showed. The inflation print was expected to rise to a 15-month high of 3.8% in April, according to an Informist Poll. Some traders covered their short bets placed ahead of the data release on expectation of a higher inflation print, dealers said.

 

"CPI (inflation data for April) was actually a positive for the market, that too, when there is so much uncertainty in the market due to the war," a dealer at a state-owned bank said. "But, (higher) crude (oil prices) continued to play out throughout the day." Talking about the expectations of an interest rate hike, the dealer said it will depend on inflation data for May as traders expect the government to hike retail fuel prices, which may push inflation higher. "Nothing much to read in this print," the dealer added.

Bond prices did not react much to the state bond auction results, which was largely in line with market expectations, dealers said. A total of 11 states raised funds worth INR 141.86 billion, less than the notified amount of INR 145 billion through the sale of bonds at the auction Tuesday. The RBI set cut-off yields on states' 10-year bonds at 7.73-7.80%. Demand from state-owned banks was firm for bonds with maturities of up to 10 years for both held-to-maturity and available-for-sale books, dealers said. Pension funds and insurance companies likely bought long-term bonds at the auction, they said.

 

OUTLOOK

On Wednesday, traders will track developments related to 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 Tuesday. Any overnight development in the West Asia war could push bond yields higher, 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 yields is not expected as CPI inflation is likely to remain high through the year, which will prompt traders to take profits at lower yield levels, dealers said. Traders will also track the movement of overnight indexed swap rates and the rupee, they said. If the rupee extends its fall Wednesday, bond prices are also expected to fall, tracking the Indian unit, dealers said. The yield on the 6.48%, 2035 bond is seen in the 6.98-7.07% range Wednesday.

 

	TUESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.1500	7.0458%	96.2425	7.0317%
6.33%, 2035	96.0325	6.9306%	96.0300	6.9309%
6.36%, 2031	98.2	6.8059%	98.32	6.7754%
6.68%, 2040	94.0700	7.3601%	94.2300	7.3408%
6.90%, 2065	90.1800	7.6974%	90.5775	7.6622%

 

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India Gilts: Remain dn on high oil prices; lower-than-view CPI aids briefly

 

	1624 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.13	96.24	96.08	96.10	96.24
YTM (%)	7.0488	7.0322	7.0563	7.0533	7.0317

 

MUMBAI--1624 IST--Prices of government bonds remained down as crude oil prices hovered above $107 per barrel, dealers said. However, bond prices had recovered some losses briefly after the CPI inflation print for April was nearly 4 basis points lower than traders' expectations, dealer said.   

 

India's headline inflation for April came in at 3.48% on year as against 3.4% in March, the government data showed. The inflation print was expected to rise to a 15-month high of 3.8% in April, according to an Informist Poll. Some traders covered their short bets placed ahead of the data release on the expectation of a higher inflation print, dealers said. However, traders remained cautious amid uncertainty over a peace deal between the US and Iran as it might lead to higher inflation data in the subsequent months, they said. Moreover, traders also expect the government to raise the retail fuel prices in the wake of a rise in crude oil prices, which also weighed on sentiment, they said.

 

"This (lower-than-expected inflation) is a positive news for the market," a dealer at a state-owned bank said. "But, elevated crude (oil prices) is still weighing on prices. Also, the next inflation print will help the market decide the trajectory of interest rate hikes." 

 

At 1624 IST, the turnover in the gilt market was INR 431.30 billion, lower than INR 446.65 billion at 1630 IST Monday, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. 

 

Bond prices have remained down due to traders' weak risk appetite, dealers said. Foreign investors likely sold gilts Tuesday as crude oil prices jumped to over $107 per barrel with no signs of de-escalation of tensions between the US and Iran, dealers said. Brent crude oil futures for July delivery rose intraday and were above $107 per barrel at 1630 IST, higher than $105.12 per barrel at 0900 IST, and $104 per barrel at the end of Indian gilt trading hours Monday. The fall of rupee to the day's high of 95.7400 per dollar also weighed on bond prices, dealers said.

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.98–7.07% range. Any major escalation in the West Asia war could push the yield on the 10-year benchmark bond to above 7.05%, dealers said. (Diksha Tripathy)

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India Gilts: Down as oil prices rise above $107/bbl; rupee fall weighs

 

	1532 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.13	96.24	96.08	96.10	96.24
YTM (%)	7.0488	7.0322	7.0563	7.0533	7.0317

 

MUMBAI--1532 IST--Prices of government bonds were down due to a rise in prices of Brent crude oil, dealers said. Depreciation of the rupee also weighed on bond prices, they said. Bond prices did not react to state bond auction results, which was largely in line with the market view, dealers added.

 

Brent crude oil futures for July delivery rose to over $107 a barrel at 1520 IST from $105.12 per barrel at 0900 IST, and $104 per barrel at the end of Indian gilt trading hours Monday. This intraday rise in oil prices weighed on bond prices. However, bond prices were supported as public sector banks bought bonds at levels seen attractive, dealers said. 

 

At 1520 IST, the turnover in the gilts market was INR 355.40 billion, down from INR 406.60 billion at 1530 IST Monday, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. Till 1520 IST, the new 10-year 6.94%, 2036 bond was the second most traded bond after the 6.48%, 2035 gilt with a trade volume of INR 48.85 billion, the CCIL data showed.

 

Bond prices didn't react react much to the state bond auction result, as it was largely in line with market expectations, dealers said. A total of 11 states raised funds worth INR 141.86 billion, less than the notified amount of INR 145 billion through the sale of bonds at the auction Tuesday. The RBI set cut-off yields on states' 10-year bonds at 7.73-7.80%. Demand from state-owned banks was firm for bonds with maturities up to 10 years for both held-to-maturity and available-for-sale books, dealers said. Pension funds and insurance companies likely bought long-term bonds at the auction, they said.

 

Traders now await CPI inflation data for April, which will be released at 1600 IST Tuesday. The inflation print is expected to rise to a 15-month high of 3.8% in April from 3.4% in March, according to an Informist poll. A higher-than-expected inflation rate will lead to a fall in bond prices, dealers said.

 

"If the (inflation) rate (for April) goes above 4%, then we could see a sudden fall of 90 paise in the market today (Tuesday)," a dealer at a public sector bank said. "But as per the market sentiment, it is less likely for CPI to rise above 4%." 
 

For the rest of the day, the yield on the 10-year benchmark bond is seen in the range of 7.00–7.07%. (Durgesh Nandan)

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India Gilts: Dn on rise in oil prices, US ylds; auction result to lend cues 

 

	1255 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.18	96.24	96.10	96.10	96.24
YTM (%)	7.0416	7.0322	7.0533	7.0533	7.0317

 

MUMBAI--1255 IST--Prices of government bonds were down as Brent crude oil prices rose to the day's high of over $106 per barrel, dealers said. An overnight rise in US yields also weighed on bond prices, dealers said. Traders await the result of the auction of state government securities, which is expected to lend further cues to the market, they said.     

 

A total of 11 states invited bids to raise INR 145 billion through the sale of bonds at the auction Tuesday. At the auction, banks' demand for bonds with maturity of less than 10 years is seen firm, dealers said. Insurers and pension funds are expected to buy long-term bonds at the auction to add to their investment books, they said. 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.

 

Some traders expect cut-off yields on states' 10-year bonds at the auction to be higher amid uncertainty due to the West Asia war, dealers said. Higher-than-expected cut-off yields could pull down bond prices. The cut-off yields on states' 10-year bonds at auction Tuesday are seen at 7.74-7.77%, according to the median of estimates of 14 bond dealers polled by Informist.

 

Traders also pointed to a sharp rise in re-issuances by states over the past few auctions, and attributed the trend to the Reserve Bank of India's recently introduced Benchmark Issuance Strategy. Rolled out on a pilot basis for nine states in April, the framework aims to improve transparency and provide greater clarity to investors. As part of the strategy, states have been asked to issue securities in specific benchmark tenure buckets as per the pre-announced calendar, the RBI had said in a release. 

 

"The cut-offs (yields) are expected to be higher this time around," a dealer at a private sector bank said. "This is because of negative factors like rupee depreciation and higher crude (oil) prices. They are weighing on your 10-year (benchmark 6.48%, 2035) bond also."

 

Bond prices were down due to Brent crude oil prices. Brent crude oil futures for July delivery were above $106 per barrel at 1230 IST, higher than $105.12 per barrel at 0900 IST, and $104 per barrel at the end of Indian gilt trading hours Monday. An overnight rise in US Treasury yields also weighed on bond prices, dealers said. The yield on the 10-year benchmark US Treasury note was at 4.44% at 1230 IST, up from 4.40% at 1700 IST Monday. 

 

At 1255 IST, the turnover in the gilt market was INR 197.25 billion, lower than INR 250.50 billion at 1230 IST Monday, data from the RBI's Negotiated Dealing System–Order Matching platform showed. The muted trade volume was due to the fact that traders awaited state bond auction result and the CPI inflation print for April, dealers said. For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.98–7.07% range. Any major escalation in the West Asia war could push the yield on the 10-year benchmark bond to above 7.05%, dealers said. (Diksha Tripathy)

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India Gilts:Recover most losses on PSU banks' buys; rise in oil price weighs

 

	0952 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.22	96.24	96.10	96.10	96.24
YTM (%)	7.0348	7.0322	7.0533	7.0533	7.0317

 

MUMBAI--0952 IST--Prices of government bonds recovered most of the earlier losses as public sector banks bought bonds at levels seen attractive, dealers said. Bond prices had fallen in early trade, tracking a rise in prices of Brent crude oil which climbed back to over $105 per barrel, dealers said. 

 

At 0952 IST, turnover in the gilt market was INR 60.90 billion, higher than INR 43.20 billion at 0930 IST Monday, 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 which weighed on the prices of 6.48%, 2035 bond, dealers said. The new 10-year bond had a total secondary market trade volume of INR 11.25 billion at 0952 IST.

       

The 6.48%, 2035 bond opened at INR 96.10, down over 14 paise from Monday, but recovered most losses to reach the day's high of INR 96.24. The recovery was fuelled by purchases from state-owned banks who continued their buying momentum from Monday and bought bonds, dealers said. The purchases were made by the banks at levels seen attractive, they said. 

 

"...7.05% (yield on the 10-year benchmark bond) is a technical level and there was support by PSUs(state-owned banks) at this level," a dealer at a state-owned bank said. "That is what is driving the recovery because, otherwise, there is no positive factor in the market today (Tuesday)."

   

Traders said the rise in Brent crude oil prices and fall of the rupee were the key factors driving down bond prices. Brent crude oil prices rose overnight and traded above $105 per barrel Tuesday after US President Donald Trump said the ceasefire with Iran was at its "weakest" and was on "massive life support". The uncertainty over the end of the US-Iran war and absence of a peace deal between the two warring nations kept traders on the sidelines, dealers said. At 0952 IST, Brent crude oil for July delivery traded at over $104 per barrel, higher than the key level of $100 per barrel at the end of Indian trading hours Friday. The rupee also fell to a record low of 95.6150 per dollar Tuesday on West Asia war-related concerns, which weighed on bond prices. 

 

Traders await the CPI inflation data for April, which will be released at 1600 IST Tuesday. The inflation print is expected to rise to a 15-month high of 3.8% in April, up from 3.4% in March, according to an Informist poll. Some traders expect the inflation print at 4%. However, if the print rises above 4% level, it might bring down bond prices, dealers said. Some traders, on the other hand, do not expect any significant rise in rates, as higher inflation is already priced in as a consequence of the war in West Asia, dealers said.

 

For the rest of the day, the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the 6.98–7.07% range. Any major escalation in the West Asia war could push the yield on the 10-year benchmark bond to above 7.05%, dealers said. (Diksha Tripathy)

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India Gilts: Seen steady ahead of CPI data, lack of significant cues

 

MUMBAI – Government bond prices are likely to open steady on caution ahead of India's CPI inflation data for April and lack of significant overnight developments in the West Asia war, dealers said. However, the absence of a peace deal between the US and Iran kept Brent crude oil prices above $105 per barrel overnight, which is likely to weigh on bond prices, they said.

 

The yield on the 10-year benchmark 6.48%, 2035 bond is expected to open near 7.03% and is seen in the 6.90-7.06% range during the day, dealers said. Public sector banks are likely to continue their buying momentum from the previous trading session as the yield on the 10-year benchmark bond is seen hovering around the key 7% level Tuesday, dealers said. Public sector banks purchased gilts worth INR 53.22 billion in the secondary market Monday.

 

The 10-year benchmark bond ended at INR 96.24, or 7.0317% yield. Gilt prices ended sharply lower Monday as traders sold gilts due to low risk appetite amid fears of further escalation in the West Asia war. Depreciation of the rupee to 95.3200 per dollar Monday also weighed.

 

At 0730 IST, Brent crude oil prices for July delivery were trading above $105 per barrel, slightly higher than $104.21 per barrel at the end of Indian trading hours on Monday. On the geopolitical front, US President Donald Trump said the ceasefire with Iran was at its "weakest" and on "massive life support" after he rejected Tehran's response to the peace agreement, according to media reports. Separately, the US imposed sanctions on 12 individuals and entities that facilitated the sale and shipment of Iranian oil to China, ahead of the US President's visit to Beijing. At 0730 IST, the benchmark US Treasury yield rose overnight to 4.43% from 4.40% at the end of Indian trading hours Monday. 

 

India's CPI inflation data for April is set to be released at 1600 IST Tuesday. Annual inflation is expected to rise to a 15-month high of 3.8% in April, up from 3.4% in March, according to an Informist poll. Some traders expect the inflation print to come in at 4%. However, if the print rises above 4% level, it might bring down bond prices, dealers said. Some traders, on the other hand, do not expect any significant rise in rates, as higher inflation is already priced in as a consequence of the war in West Asia, dealers said.

 

Traders will also watch overnight indexed swap rates and the rupee's movement throughout the day.  (Janwee Prajapati)

 

US$1 = INR 95.63

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

 

Edited by Tanima Banerjee

 

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