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Informist, Monday, Jun. 8, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended higher Monday, tracking an intraday fall in crude oil prices after US President Donald Trump said Iran and Israel are looking to do an immediate ceasefire, dealers said. Bond prices were also supported by purchases from foreign banks amid hopes of increased foreign inflows following the announcement of measures by the Reserve Bank of India at the Monetary Policy Committee meeting Friday, dealers said. 

 

The five-year 6.36%, 2031 bond ended at INR 99.04, up 19 paise from Friday. It was the third most traded security after the new 10-year and the current benchmark 10-year bond, with a turnover of INR 60.50 billion by the end of gilt market hours, according to data from the Clearing Corp. of India Ltd. Traders remained reluctant to take positions at the longer end of the yield curve amid concerns that the RBI's rate-setting panel could raise the repo rate from the current 5.25% in the next meeting.

"There are FPI flows coming into the short-term segment through foreign banks," a dealer at a state-owned bank said. "This is what supported the price (of short-term bonds). These flows are expected to increase further once the guidelines are announced. The five-year bond could rally more in the near term," the dealer said. "Some steepening (of the yield curve) has already happened, and there could be more."

The new 10-year 6.94%, 2036 bond was the most traded security Monday, with a turnover of INR 207.60 billion at 1700 IST. Market participants have started shifting to the new paper as they expect it to become the benchmark bond after one more auction, scheduled for Jul. 3, dealers said. The new 10-year bond ended at INR 99.88, up nearly 7 paise from Friday.

Meanwhile, the current benchmark 10-year 6.48%, 2035 bond ended at INR 96.78, up from INR 96.62 on Friday. Its yield settled at 6.9532%, well below the psychologically crucial level of 7.00%. The price of the benchmark bond was supported as some traders covered short positions in the paper, anticipating that it would gradually fall out of favour by the next 10-year gilt auction, dealers said. A proxy for tracking short sales in a particular bond is the transaction volume in the special repo segment of the Clearcorp Repo Order Matching System. Data at 1700 IST showed trades worth INR 129.16 billion in the 6.48 35bond, down from INR 191.06 billion on Friday.

State-owned banks also bought bonds at levels seen as attractive, lending support to prices, dealers said. Public sector banks typically step in when the yield on the benchmark 10-year bond approaches the 6.98% mark, dealers said.

The total turnover in the government securities market stood at INR 587.70 billion, significantly lower than INR 1.07 trillion on Friday. Trading volumes remained subdued as market participants awaited greater clarity on the RBI's recently announced measures and the operational guidelines. Uncertainty surrounding the Israel-Iran conflict also kept trading activity muted, dealers said. Market participants believe a positive development in West Asia could help the benchmark 10-year yield break below 6.95%, potentially leading to a sharp rise in trading volumes.

"Nobody is going too aggressive today," a dealer at a private-sector bank said. "Everyone is waiting for clarity on the RBI measures, and that will come only when the guidelines (on RBI's newly announced measures for FPI gilt purchases) are released. There is also a lot of uncertainty on the war front, so traders are preferring to hold positions."

Bond prices had opened lower after a sharp rise in US Treasury yields and Brent crude oil prices following reports of fresh Iranian attacks on Israel, dealers said. The 10-year US Treasury yield hit a two-week high Monday, pulling down Indian gilt prices, dealers said. The yield on the 10-year US Treasury note was at 4.55% at 1700 IST, up from 4.48% at 1700 IST Friday. Meanwhile, Brent crude futures for August delivery rose sharply over the weekend, breaching the $95-per-barrel mark, weighing on bond prices, dealers said. Intraday, it rose to the day's high of $98.08 per barrel from $94.92 per barrel at 1700 IST Friday, on reports of escalation of tension between Iran and Israel, weighing on bond prices, dealers said. However, at the close of Indian gilt market hours, Brent crude oil was back at $94.47 per barrel, a level similar to that of Friday as Iran reportedly called off attacks on Israel unless Lebanon is targeted. Crude prices had also retreated after US President Donald Trump said in a post on Truth Social that Israel and Iran were looking at an immediate ceasefire.

OUTLOOK

Bond prices are likely to take cues from developments related to the Israel-Iran conflict and their impact on crude oil prices on Tuesday, dealers said. The yield on the benchmark 10-year 6.48%, 2035 bond is expected to move within a 6.90%-7.00% range. Dealers said a ceasefire agreement could push the benchmark yield towards 6.90%. Conversely, any setback in negotiations and a renewed rise in crude oil prices could drive the yield closer to 7.00%.

Traders will also monitor the outcome of Tuesday's state government securities auction, where 10 states are scheduled to raise INR 148 billion through bond sales. The auction size is smaller than the INR 182.50 billion indicated in the borrowing calendar for the June quarter, and dealers expect demand to outstrip supply, leading to aggressive bidding. Demand for state bonds at the auction is likely to come from banks, insurance companies and pension funds, dealers said.  

 

	MONDAY		FRIDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	96.7800	6.9532%	96.6200	6.9772%
6.94%, 2036	99.8800	6.9558%	99.8150	6.9651%
6.36%, 2031	99.0400	6.5985%	98.8500	6.6464%
6.68%, 2040	94.8400	7.2708%	94.6800	7.2897%
6.90%, 2065	90.7750	7.6445%	90.6000	7.6600%

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India Gilts: Inch higher as crude oil price falls, FPIs buy

 

	1650 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.79	96.79	96.48	96.53	96.62
YTM (%)	6.9521	6.9521	6.9984	6.9916	6.9772

 

	1650 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.875	99.88	99.63	99.64	99.82
YTM (%)	6.9566	6.9566	6.9912	6.9898	6.9651

 

MUMBAI--1650 IST--Prices of government bonds inched higher as Brent crude oil price eased and foreign inflows came into the gilt market, dealers said. The foreign inflows were mainly concentrated in 10-year bonds. Traders await the Reserve Bank of India's directions on external commercial borrowing and foreign currency non-resident deposits, they said. 

 

At 1650 IST, the Brent crude oil futures contract for August delivery was at $95.81 per barrel, down from over $96 per barrel at the Indian market opening. US President Donald Trump said Israel and Iran are looking to do an immediate ceasefire and that peace talks in West Asia are proceeding.

 

"Today (Monday), traders are just holding their positions as we are waiting for some confirmation from both sides," a dealer at a private-sector bank said. "There is no confirmation from the war and our government related to tax cut, but the prices (government bonds' prices) are reacting to news."

 

Till 1650 IST, the new 10-year 6.94%, 2036 bond was traded the most in the gilt market with a turnover of INR 188.25 billion. The 10-year benchmark 6.48%, 2035 bond fell into second position with a trade volume of INR 146.70 billion. At 1650 IST, total turnover in the government securities market was INR 517.65 billion, sharply lower than INR 994.65 billion at 1630 IST Friday, according to data from Clearing Corp. of India.  (Durgesh Nandan)

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India Gilts: Remain tad up; short-term bonds up more on likely FPI flows

 

	1234 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.64	96.70	96.48	96.53	96.62
YTM (%)	6.9750	6.9652	6.9984	6.9916	6.9772

 

	1234 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.74	99.81	99.63	99.64	99.82
YTM (%)	6.9756	6.9665	6.9912	6.9898	6.9651

 

MUMBAI--1234 IST--Prices of government bonds were slightly higher, with short-term bonds performing better than other tenures due to likely foreign inflows, dealers said. Market sentiment was lifted following measures announced by the Reserve Bank of India on Friday which are likely to improve foreign inflows further, dealers said. Some traders covered short positions in the 6.48%, 2035 bond, which also helped bond prices, they said.    

 

Traders expect the short-term bonds to continue to perform better than longer-term bonds, which will likely steepen the bond yield curve, dealers said. The 6.36%, 2031 bond was at INR 99.01, up 18 paise from its close on Friday. Traders want to take positions at the longer end of the curve as they await major economic data which will likely set the stage for a repo rate hike, dealers said.

 

"There is only normal trading in the market...5-year (bonds) are up, the 15-year (bond yield) is almost flat," a dealer at a private sector bank said. "Shorter-term bonds are up because of some FPI flows in short-term G-sec and SDL, domestic players are not taking any aggressive bets."

 

The 10-year benchmark 6.48%, 2035 bond and the new 10-year 6.94%, 2036 bond traded at almost similar levels. Some traders covered their short positions in the 6.48%, 2035 bond as they expect the bond to be out of favour by the next weekly gilt auction, 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 1234 IST showed trades worth INR 129.16 billion in the 6.48%, 2035 gilt, slightly up from INR 191.06 billion Wednesday.

 

Some traders considered the 6.94%, 2036 as the benchmark bond after it recorded the highest trade volume in the secondary market, dealers said. At 1234 IST, the trade volume on the 6.94%, 2036 bond was at INR 89.45 billion, which was over 35% of the total trade volume. 

 

Trade volume in the secondary market remained subdued as traders await developments regarding the inclusion of Indian bonds in Bloomberg's flagship Global Aggregate Index in the current month. Some traders also remained on the sidelines amid uncertainty around a peace agreement between US and Iran, dealers said. The total volume in the government securities market at 1234 IST was INR 234.30 billion, down from INR 703.50 billion at 1330 IST Friday, according to data from the RBI's Negotiated Dealing System. The yield on the 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.95–7.02% for the rest of the day.  (Janwee Prajapati)

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India Gilts: In thin band amid uncertainty on US-Iran war; trade volume low

 

	1035 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.63	96.66	96.48	96.53	96.62
YTM (%)	6.9758	6.9713	6.9984	6.9916	6.9772

 

	1035 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.72	99.76	99.63	99.64	99.815
YTM (%)	6.9785	6.9728	6.9912	6.9898	6.9651

 

MUMBAI--1035 IST--Prices of government bonds were in a thin band amid uncertainty over the end of the US-Iran war, dealers said. An intraday rise in Brent crude oil prices pulled bond prices down. However, losses were limited as state-owned banks bought bonds at levels seen as attractive, they said. 

 

Brent crude oil futures for August delivery rose to over $97 per barrel at 1015 IST, up from over $96 per barrel at 0900 IST and sharply up from over $94 per barrel at the end of Indian gilt market hours Friday. The uncertainty over the end of the US-Iran war pushed crude oil prices higher. The war-related uncertainty also weighed on trade volume in the market, dealers said. At 1030 IST, total turnover in the government securities market was INR 86.55 billion, sharply lower than INR 364.70 at 1040 IST Friday, data from Clearing Corp. of India showed.

 

The new 10-year 6.94%, 2036 bond replaced the benchmark 6.48%, 2035 bond as the most traded bond in the market. At 1030 IST, trade volume of 6.94%, 2036 bond was INR 38.50 billion, while that of the 10-year benchmark 6.48%, 2035 bond, which was pushed down to the second place, had a trade volume of INR 31.40 billion, the CCIL data showed. Traders expect the liquidity in the 6.48%, 2035 bond to drop significantly after one more auction of the new 10-year bond, dealers said. 

 

"It (the 6.94%, 2036 bond) is close to becoming the new benchmark now," a dealer at a private-sector bank said. "If we look at the volumes today (Monday), 6.94% gilt is the most traded. Just one more auction would make it the benchmark."  

 

Bond prices were supported by purchases from state-owned banks, dealers said. Public-sector banks bought bonds as the yield on the 10-year benchmark 6.48, 2035 bond remained below 7% level, dealers said. They are expected to continue their buying momentum throughout the trading session Monday, dealers said. The yield on the 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.95–7.00% for the rest of the day.  (Diksha Tripathy)

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India Gilts: Tad down as crude oil prices up on W Asia war; PSU bk buy helps

 

	0925 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.59	96.66	96.48	96.53	96.62
YTM (%)	6.9818	6.9713	6.9984	6.9916	6.9772

 

	0925 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.72	99.76	99.63	99.64	99.82
YTM (%)	6.9785	6.9728	6.9912	6.9898	6.9651

 

MUMBAI--0925 IST--Prices of government bonds fell slightly due to a rise in Brent crude oil prices above the crucial level of $95 per barrel following a fresh escalation in the West Asia war, dealers said. The fall in bond prices was contained as sentiment was lifted by the announcement of several steps in tandem to attract foreign capital by the RBI and the government, along with a delay in the rate hike, Friday. 

 

"We are down because of crude but I am expecting recovery in the day," a dealer at a state-owned bank said. "I do not think (yield on 10-year benchmark bond) will rise above 7% today (Monday)."

 

Escalations in West Asia war weighed on market sentiment as the likelihood of a peace agreement between the warring nations seemed fragile. Brent crude futures for August delivery were at $96.32 per barrel, up from $94.92 per barrel at the end of Indian trading hours Friday. The US Treasury yields traded at 4.57% at 0925 IST, up from 4.48% at 1700 IST Friday, which also weighed on bond prices.      

 

The fall in bond prices was limited as public sector banks likely bought bonds in the secondary market after they made room in their portfolios Friday. These banks net sold INR 106.60 billion of gilts in the secondary market Friday as they booked profits on their holdings, dealers said. 

 

The total volume in the government securities market at 0925 IST was INR 47.05 billion, down from INR 84.00 billion at 0930 IST Friday, according to data from the RBI's Negotiated Dealing System. The yield on the 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.95–7.02% for the rest of the day.  (Janwee Prajapati)

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India Gilts:Seen tad down as fresh escalation in W Asia war sends oil higher

 

MUMBAI – Government bond prices are likely to open slightly lower Monday following the escalation in the West Asia war, which pushed up Brent crude oil prices over the key $95-per-barrel mark, dealers said. An overnight rise in US Treasury yields will also likely weigh on the bond prices, dealers said. However, losses are likely to remain limited as market sentiment was lifted following the measures announced by the Reserve Bank of India's Monetary Policy Committee Friday which are likely to improve foreign inflows, dealers said.   

 

The yield on the 10-year benchmark 6.48%, 2035 government bond is expected to open near 6.99% and move between 6.95% and 7.02% during the day, dealers said. Some traders do not expect bond yields to rise past the crucial level of 7% if Brent crude oil prices remain below the psychological level of $100 per barrel, dealers said. However, public sector banks are likely to book profit on their holdings as they had picked up bonds at level above 7% on the 10-year benchmark 6.48%, 2035 bond, which will weigh on bond prices dealers said. These banks had net sold nearly INR 161 billion worth of bonds, Friday. Some traders were also hopeful of an increase in foreign inflows after data released by Clearing Corp. of India showed that foreign portfolio investments net bought gilts worth INR 32.22 billion Friday following the announcement of several steps in tandem to attract foreign capital by the RBI and the government. Thursday, the 10-year benchmark bond ended at INR 96.62, or 6.9772% yield.  

 

On the West Asia front, US President Donald Trump was briefed on renewed clashes after Iran fired a missile at Israel for the first time since the ceasefire began, according to media reports. "This certainly isn't going to help negotiations," Trump said. The US president said he would urge Israeli Prime Minister Benjamin Netanyahu against retaliating after Iran launched missiles at Israeli targets in response to an attack near Beirut. An Iranian official involved in US-Iran talks said a deal with President Trump was "no longer feasible at this stage." 

 

Iranian Parliament Speaker M.B. Ghalibaf posted on the social media platform the US "naval blockade and violations of agreements on Lebanon" breached the ceasefire. He said US bases and assets in the region were now "legitimate targets" due to the blockade and military operations in Lebanon. 

 

US yields were up Friday due to a higher likelihood of the US Federal Reserve hiking rates in its December meeting, following a May payrolls report that far surpassed expectations. Non-farm payrolls rose by 172,000 last month, well above forecasts. At 0830 IST, US Treasury yield on the 10-year benchmark note was at 4.57%, up from 4.48% at 1700 IST Friday.

 

Bond yields will also track any significant movement in overnight swap rates and the rupee.  (Janwee Prajapati)  End

 

US$1 = INR 95.71

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

 

Edited by Saji George Titus

 

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