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Informist, Wednesday, May 13, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended steady after giving up early gains due to a rise in prices of Brent crude oil, dealers said. Bond prices were supported by purchases from state-owned banks at levels seen as attractive, they said. The total volume in the government securities market was similar to that on Tuesday due to lack of major cues on both the domestic and global fronts. 

 

The 10-year benchmark 6.48%, 2035 government bond ended at INR 96.13, slightly lower than INR 96.15 Tuesday. Its yield ended at 7.0493%, similar to 7.0458% Tuesday. The benchmark yield ended above the psychologically crucial 7% mark for the third consecutive session Wednesday. The newly-issued 10-year 6.94%, 2036 bond ended at INR 99.49 or 7.0121% yield and traded between 6.97% and 7.02% yields during the day. The total traded volume of government securities was at INR 484.10 billion, against INR 489.15 billion Tuesday, data from Clearing Corp. of India Ltd. showed. 

 

Bond prices were supported by improved risk appetite of traders as Brent crude oil prices remained largely stable through most of the session Wednesday, with no major signs of escalation in the West Asia conflict, dealers said. The stability in crude prices encouraged traders to build fresh positions in the bond market, they said. State-owned banks were likely the most active buyers of bonds Wednesday, dealers said. However, gains in bond prices were capped in the last hour of trade after Brent crude oil prices rose above $108 per barrel from over $106 per barrel at 0900 IST, they added. 

 

"We (bond prices) were up because crude was down, so people were buying...7.05% (the yield on the 6.48%, 2035 bond) is a good level for public sector banks to buy," a dealer at a public sector bank said. "The moment people see Brent crude (oil) prices in red (indicating fall in oil prices) they become happy."

 

In early trade Wednesday, bond prices reacted positively to India's lower-than-expected consumer price index inflation print of 3.48% for April which came out Tuesday during market hours, dealers said. Tuesday, the data briefly helped bond prices recover some losses but elevated crude oil prices weighed on the recovery, they said. An Informist poll had pegged the inflation rate at 3.8?sed on estimates from market participants. Traders now await the release of wholesale price inflation data for further cues on the impact of the West Asia war on fuel prices, dealers said.

 

The government has already raised commercial fuel prices in India, which is likely to exert upward pressure on inflation in the coming months. Traders also expect the government to raise retail petrol and diesel prices to support oil marketing companies, which are incurring losses on fuel sales following the sharp rise in crude oil prices due to the conflict in West Asia, dealers said.

 

Traders said comments by RBI Governor Sanjay Malhotra on the possibility of fuel price hikes later this month heightened concerns about an interest rate increase. A rise in retail fuel prices is "just a matter of time" if the West Asia conflict persists and crude oil prices remain elevated, Malhotra said at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland on Tuesday, Bloomberg reported Wednesday.

 

With expectations of a fuel price hike later in May and concerns over a rise in inflation, traders now expect the RBI's Monetary Policy Committee to begin raising interest rates as early as August, dealers said. Earlier, traders had expected the rate hike cycle to begin in the third quarter of 2026-27 (Apr-Mar), but elevated crude oil prices and supply chain concerns have altered those expectations, they added.

 

Bond prices were also supported in early trade by the appreciation in the rupee to 95.5100 per dollar, aided by dollar sales from banks and the government's decision to raise import duties on gold and silver, dealers said. The government imposed a 10?sic customs duty and a 5% agriculture infrastructure and development cess on imports of gold and silver, taking the effective import tax to 15% from 6%. However, the rupee later pared gains and settled at 95.7050 per dollar, which weighed on bond prices, dealers said.

 

Bond prices also trimmed some gains after the RBI set higher-than-expected cut-off yields at the Treasury bill auction, dealers said. The cut-off yield on the 364-day Treasury bill was set at 5.7688%, sharply higher than 5.6903% last week and above the 5.71% estimate in an Informist poll. The cut-off yield on the 91-day Treasury bill was set at 5.3398%, up from 5.2900% last week and slightly higher than the 5.32% estimate in the Informist poll. Dealers attributed the higher cut-off yields to low surplus liquidity in the banking system.

 

The government announced on Wednesday that it would switch eight gilts worth INR 300 billion with five longer-term gilts through an auction Monday, the RBI said in a press release post market hours. Banks hold most of the source securities announced for the switch auction, dealers said. However, dealers were not keen on adding the destination securities of longer tenure to their portfolios, they said. Traders would have accepted the 6.33%, 2035 gilt at the auction, dealers said. 

 

OUTLOOK

On Thursday, 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 Wednesday. Any overnight escalation in the West Asia war could push bond yields higher, dealers said. Traders will also track wholesale inflation data for April, scheduled to be released at 1200 IST Thursday. 

 

Any major sign of an end to the war would 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 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 Thursday, 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 6.98-7.10% range Thursday.

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.1275	7.0493%	96.1500	7.0458%
6.33%, 2035	96.0800	6.9233%	96.0325	6.9306%
6.36%, 2031	98.1	6.8313%	98.2	6.8059%
6.68%, 2040	94.0800	7.3590%	94.0700	7.3601%
6.90%, 2065	90.2000	7.6956%	90.1800	7.6974%

 

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India Gilts: Remain in thin band; rise in Brent crude price weighs

 

	1544 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.15	96.32	96.08	96.15	96.15
YTM (%)	7.0459	7.0206	7.0564	7.0459	7.0458

 

MUMBAI--1544 IST--Prices of government bonds remained in a thin band after Brent crude oil prices rose intraday to over $107 per barrel, dealers said. Bond prices were supported as traders bought gilts at levels seen attractive, they said. A higher-than-expected cut-off yield on the 364-day Treasury bill at the auction Wednesday also weighed on bond prices, dealers said. 

 

The Reserve Bank of India set the 364-day T-bill cut-off yield at 5.7688%, significantly higher than last week's 5.6903% and also higher than the estimate of 5.71% in an Informist poll. Traders attributed the higher cut-off yield to low surplus liquidity in the banking system. Due to high overnight market rates, banks are disinterested in the one-year bond, dealers said.

 

In early trade Wednesday, a lower-than-expected CPI inflation print of 3.48% on year for April helped bond prices. However, RBI Governor Sanjay Malhotra's comments on expectations of a hike in fuel prices later this month raised concerns, which reflected on bond prices, dealers said. An increase in retail fuel prices by the Centre is "just a matter of time" if the West Asia war is prolonged and oil prices remain elevated, the governor said at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland Tuesday, Bloomberg reported Wednesday. With expectations of retail fuel price hikes later in May and inflation likely to flare up, traders now expect the RBI's Monetary Policy Committee to hike interest rates as soon as in August, dealers said.       

 

"Due to the (RBI) governor's comment, the market is anticipating rate hikes before October or maybe before that as petrol and diesel prices are going to rise due to ongoing geopolitical conditions," a dealer at a public sector bank said.

 

An intraday rise in Brent crude oil futures for July delivery weighed on bond prices, dealers said. Brent crude oil futures for July delivery were at $107.55 per barrel at 1600 IST, up from $106.59 per barrel at 0900 IST. Crude oil prices have remained above $100 per barrel amid uncertainty about an end to the US-Iran war.

 

At 1544 IST, the turnover in the gilts market was INR 416.90 billion, higher than INR 358.15 billion at the same time the previous day, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. Till 1530 IST, the new 10-year 6.94%, 2036 bond trade volume was INR 72.80 billion, Clearing Corp. of India data showed.

 

For the rest of the day, the yield on the 10-year benchmark bond is seen in the range of 6.98–7.07%. (Durgesh Nandan)

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India Gilts: Remain up on value buying, no major change in crude oil prices

 

	1255 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.25	96.32	96.12	96.15	96.15
YTM (%)	7.0304	7.0206	7.0504	7.0459	7.0458

 

MUMBAI--1255 IST--Prices of government bonds remained up as traders continued to buy bonds at levels seen attractive, dealers said. Market sentiment was positive amid no fresh signs of escalation in the West Asia conflict and also as crude oil prices remained broadly stable, they said. However, Brent crude oil prices remained above $100 per barrel which continued to cap gains in bond prices, dealers said.

 

Brent crude oil futures for July delivery eased to over $106 per barrel from above $107 per barrel at the close of Indian gilt trading hours Tuesday. Since 0900 IST, Brent crude oil prices have largely remained unchanged amid the absence of any fresh escalation in the war between the US and Iran. The stability in oil prices improved risk appetite in the domestic bond market, prompting traders to build fresh positions, dealers said.

 

State-owned banks were also seen actively buying bonds in the secondary market, extending their purchasing momentum from the previous three trading sessions, taking their total purchases to nearly INR 141 billion in the secondary market, dealers said. Public sector banks were net buyers of gilts worth INR 39.31 billion on Tuesday, according to data from Clearing Corp of India. 

 

"The gold import duty measure had a second-order positive impact on bond prices," a dealer at a private-sector bank said. "There is no fresh development in the (West Asia) war also, and PSUs (public sector banks) are actively buying, too. All these factors are helping the market." 

 

In early trade, bond prices were supported by the appreciation of the rupee to 95.5100 per dollar, aided by dollar sales from banks and the government's move to raise import duties on gold and silver, dealers said. The government imposed a 10?sic customs duty and a 5% agriculture infrastructure and development cess on imports of gold and silver, taking the effective import tax to 15% from 6%. However, the rupee later pared gains and weakened to 95.6700 a dollar at 1240 IST, which weighed on bond prices and trimmed some gains, dealers said.

 

At 1255 IST, turnover in the gilt market was INR 249.40 billion, higher than INR 170.00 billion at 1230 IST Tuesday, data from the Reserve Bank of India's Negotiated Dealing System–Order Matching platform showed. 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 take the yield on the 10-year benchmark bond to above 7.07%, dealers said. (Diksha Tripathy)

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India Gilts: Up on PSU banks' buys, slight ease in crude oil prices

 

--Dealers: Gilts up on likely PSU bks' buys near 7.05% on 6.48%, 2035 bond 

--Dealers:Gilts up as crude oil eases intraday, lower-than-expected CPI helps 

 

	0950 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.26	96.32	96.12	96.15	96.15
YTM (%)	7.0300	7.0206	7.0504	7.0459	7.0458

 

MUMBAI--0950 IST--Prices of government bonds were up due to improved risk appetite with no fresh escalations in the West Asia war, dealers said. Bond prices were also supported by a lower-than-expected CPI inflation print for April, released Tuesday during market hours, they said.  

 

State-owned banks bought bonds when the yield on the 10-year benchmark 6.48%, 2035 bond was near 7.05%, which helped bond prices, dealers said. Bond prices were also up tracking a slight fall in Brent crude oil prices to $106.46 per barrel at 0950 IST, down from $107.40 at the end of Indian gilt trading hours Tuesday.

 

"Traders, mostly PSUs (public sector banks), are buying at these (7.05%) levels," a dealer at a state-owned bank said. "We were expecting the yields to rise because of a rise in US yields, but that did not happen. This may be because of better (India) inflation data also." 

 

India's CPI inflation for April was at 3.48% on year, lower than market expectations of 3.8%. The data briefly helped bond prices to recover some losses but elevated crude oil prices weighed on the recovery, dealers said. Traders now await the wholesale inflation data, to be released Thursday, to get more clarity on the impact of the West Asia war on fuel prices. The government has raised commercial energy prices in India, which is likely to weigh on inflation print for coming months. Traders also expect the government to hike petrol and diesel prices to support oil marketing companies, which are incurring losses on retail sales after crude oil prices spiked due to the conflict in West Asia. In anticipation of any such announcement, traders will closely track the Cabinet meeting Wednesday.  

 

At 0950 IST, turnover in the gilt market was INR 97.45 billion, higher than INR 40.45 billion at 0930 IST Tuesday, 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 24.60 billion at 0950 IST.

 

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 down as oil stays above $100/bbl; rise in US ylds to weigh

 

MUMBAI – Government bond prices are likely to open lower as Brent crude oil prices continued to trade above the crucial level of $100 per barrel, dealers said. An overnight rise in US treasury yields will also weigh on bond prices, they said. Traders will also watch overnight indexed swap rates and the rupee's movement throughout the day.

 

The yield on the 10-year benchmark 6.48%, 2035 bond is expected to open near 7.05% and is seen in the 7.02-7.07% 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 above the key 7% level and near 7.05% Wednesday, dealers said. Public sector banks purchased gilts worth INR 39.31 billion in the secondary market Tuesday.   

 

On Tuesday, the 10-year benchmark bond ended at INR 96.15, or 7.0458% yield. Gilt prices ended lower Tuesday tracking a rise in Brent crude oil prices and depreciation of the rupee to 95.63 per dollar. The fall was limited as some state-owned banks bought bonds at levels seen as attractive. Traders covered short bets following a lower-than-expected India's inflation data for April. 

  
India's April CPI inflation data, released during market hours on Tuesday, came in below expectations and briefly eased concern that surging crude oil prices would drive inflation higher. However, traders still anticipate a sharper increase in wholesale prices as commercial energy prices in India have been raised but retail kept unchanged. Traders also expect the government to hike petrol and diesel prices to support oil marketing companies, which are incurring losses on retail sales after crude oil prices spiked due to the conflict in West Asia.

 

At 0740 IST, Brent crude oil futures for July delivery traded over $107 per barrel, almost similar to $107.40 at the end of Indian trading hours Tuesday. Iran said the US must accept Tehran's latest peace proposal or risk the collapse of the agreement, after US President Donald Trump said the West Asia truce was on the brink of failure, according to media reports.

 

Data released post market hours Tuesday showed headline inflation in the US rose 3.8% on year last month, slightly higher than a Wall Street Journal poll estimate of a 3.7% rise. Core CPI was up 2.8% on year. The yield on the 10-year US Treasury note rose after the data release. At 0740 IST, the benchmark 10-year US Treasury yield was 4.47%, the highest in almost a year, up from 4.43% at 1700 IST Monday. (Janwee Prajapati)

 

US$1 = INR 95.71

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

 

Edited by Avishek Dutta

 

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