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Informist, Tuesday, Jun. 9, 2026

 

By Diksha Tripathy 

 

MUMBAI – Prices of government bonds ended sharply higher on inflows from foreign portfolio investors for the third straight day following the announcement of supportive measures by the Reserve Bank of India at the Monetary Policy Committee meeting Friday, dealers said. The fall in prices of Brent crude oil also supported bond prices Tuesday, dealers said. However, gains were capped as traders booked profits, they said.   

 

The 10-year 6.48%, 2035 bond ended at INR 97.08, sharply higher than INR 96.78 Monday. Its yield settled at 6.9082%, the lowest since Apr. 21, and down from Monday's 6.9532%. The new 10-year 6.94%, 2036 bond, the most-traded security of the day, ended at INR 100.16, 28 paise higher than Monday's close of INR 99.88. Its yield eased to 6.9163% from 6.9558% Monday. Trade volume in the 6.94%, 2036 bond was INR 431.75 billion at 1700 IST, over three times the volume in the second-most traded 6.48%, 2035 bond, according to data from the Clearing Corp. of India Ltd. The total turnover in the government securities market surged to INR 861.95 billion from INR 582.45 billion at 1700 IST on Monday. There were no trades using the e-rupee wholesale pilot Tuesday, as has been the case since February. 

Traders attributed the rise in trading activity to improved market sentiment following a series of measures announced by the RBI and the government to encourage foreign capital inflows. These include tax relief for foreign investors in government bonds, removal of investment restrictions under the General Route, and steps to facilitate cheaper overseas fund-raising by banks and attract fresh FCNR(B) deposits.

 

These measures have triggered increased buying by foreign banks, especially with India's government bonds now likely to be included on Bloomberg's flagship Global Aggregate Index, dealers said. Some traders are front-running the expected activity, with the announcement anticipated in June. According to CCIL data, foreign portfolio investors' bond holdings through the fully accessible route were at a record high of INR 3.33 trillion at 1724 IST, with data showing buys worth over INR 10 billion Tuesday.

 

"The volumes were expected to go up since people were waiting for directions by the RBI on measures that it had announced on the policy decision day," a dealer at a state-owned bank said. "Also, there was trading activity by traders across the board."

 

Foreign banks were likely net buyers of gilts Tuesday, extending the momentum from Monday, when they had net purchased gilts worth INR 33.62 billion, according to CCIL data. Their buying supported bond prices throughout the session Tuesday, dealers said. Market participants say the measures announced by the RBI will help address liquidity requirements more comfortably in the second half of 2026-27, further boosting sentiment, dealers said. 

"Foreign banks have been aggressively buying after the announcement of relief measures for FPIs," a dealer at a primary dealership said. "It is a nice opportunity for them. RBI measures are positive for them; crude (oil) prices have also come down."

Bond prices were also supported by a decline in crude oil prices amid hope of a resolution to the West Asia war. Brent crude futures for August delivery were at $92.53 per barrel at 1700 IST, compared with $94.47 at the close of gilt trading hours Monday. Dealers said the yield on the 6.48%, 2035 bond could break below the psychologically crucial 6.90% mark if a ceasefire is reached and the Strait of Hormuz reopens, easing concerns about global oil supply.

During the day, the benchmark yield briefly slipped below 6.90%, touching an intraday low of 6.8958%, its lowest level since Apr. 21, but failed to sustain the fall as traders booked profits at attractive levels, dealers said. State-owned banks were likely among the key sellers Tuesday, dealers said.

"PSUs (state-owned banks) have been pain bearers, so today (Tuesday) was their day," a dealer at a small finance bank said. "They were buying at 7.10% and 7.14% levels (yield on 6.48%, 2035 bond) so it looks like they did make the move today and booked profits. The sentiment in the market right now is sell on rise (in prices)."

Bond prices did not react much to the outcome of the state debt auction, through which 10 states raised INR 148 billion. The RBI set a cut-off yield of 7.63% on Tamil Nadu's 7.74%, 2036 bond, lower than the 7.65% median estimate in the Informist poll. State-owned banks likely bid aggressively for bonds to add to their held-for-trading portfolios, while demand for long-term papers came from insurers, dealers said.

OUTLOOK

On Wednesday, government bond prices are likely to take cues from developments in the West Asia war and its impact on Brent crude oil prices, dealers said. The yield on the benchmark 10-year 6.48%, 2035 bond is expected to move in a range of a 6.88-7.00%. Dealers said a ceasefire agreement could pull the benchmark yield towards 6.85%. However, any setback in negotiations and a renewed rise in crude oil prices could push the yield closer to 7.00%.

 

	TUESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.48%, 2035	97.0800	6.9082%	96.7800	6.9532%
6.94%, 2036	100.1600	6.9163%	99.8800	6.9558%
6.36%, 2031	99.3800	6.5128%	99.0400	6.5985%
6.68%, 2040	95.2700	7.2199%	94.8400	7.2708%
6.90%, 2065	91.0700	7.6187%	90.7750	7.6445%

 

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India Gilts:Remain sharply up on intraday easing of crude oil price, FPI buys

 

	1630 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	97.12	97.16	96.95	96.99	96.78
YTM (%)	6.9018	6.8958	6.9277	6.9217	6.9532

 

	1630 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.1875	100.25	100.00	100.00	99.88
YTM (%)	6.9125	6.904	6.9389	6.9389	6.9558

 

MUMBAI--1630 IST--Prices of government bonds were sharply higher as Brent crude oil prices eased to $92 per barrel intraday, sharply lower than the psychologically crucial level of $100 per barrel, dealers said. Moreover, foreign participants likely continued their buying momentum, which also supported gilt prices, they said. Bond prices were little changed after the result of weekly state government bond auction was broadly in line with expectations, dealers said. 

 

Brent crude futures for August delivery fell to $92 per barrel from $93.47 per barrel at 0900 IST. Crude oil prices fell after US President Donald Trump indicated that peace deal talks with Iran were in the final stage. This will lead to reopening of the Strait of Hormuz, which will ease concerns about global oil supply and rising inflation, dealers said. 

 

Traders remained hopeful of robust foreign inflows following the slew of measures announced by the Reserve Bank of India and the government to improve foreign inflows, which also buoyed bond prices in the secondary market. According to Clearing Corp. of India's data, foreign portfolio investors' bond holdings through the fully accessible route were at a record high of INR 3.32 trillion at 1512 IST.

 

At the weekly state bond auction, 10 states raised INR 148 billion through the sale of bonds, dealers said. The central bank set a cut-off yield of 7.63% on Tamil Nadu's 10-year 7.74%, 2036 bond which was largely in line with the market's expectations. The cut-off yield on Tamil Nadu's 10-year bond at Tuesday's auction was seen at 7.65%, according to an Informist poll. Banks, insurance companies and mutual funds were among the major participants at the state bond auction Tuesday. 

 

"The auction was good as market sentiments are positive due to recent updates from MPC (RBI's Monetary Policy Committee meeting on Friday)," a dealer at a state-owned bank said. "Insurance companies bid aggressively for long-term bonds as they always do, and it has been the case for the last six months." 

 

The new 10-year 6.94%, 206 bond continued to trade above INR 100 and at 1630 IST, the bond had a total volume of INR 404.35 billion in the secondary market. The 6.48%, 2035 bond turnover was INR 10.73 billion at 1630 IST. 

 

The total volume in the government securities market at 1630 IST was INR 796.10 billion, higher than INR 458.95 billion at the same time Monday, according to data from the RBI's Negotiated Dealing System. (Janwee Prajapati and Durgesh Nandan)

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India Gilts: Remain up on likely FPI buys; auction demand seen robust

 

1232 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
					6.48%, 2035
PRICE (INR)	97.01	97.12	96.95	96.99	96.78
YTM (%)	6.9194	6.9026	6.9277	6.9217	6.9532

 

	1232 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.07	100.25	100.00	100.00	99.88
YTM (%)	6.929	6.904	6.9389	6.9389	6.9558

 

MUMBAI--1232 IST--Prices of government bonds were up as foreign participants likely continued to buy Indian gilts, dealers said. Traders remained hopeful of robust foreign inflows and an end to the four-month long West Asia war, which also buoyed bond prices in the secondary market, they said. Demand at the INR 148-billion auction was seen firm, dealers said.    

 

Traders expect foreign fund inflows to be in a range of INR 40 billion to INR 50 billion following the slew of measures announced by the Reserve Bank of India and the government to improve foreign inflows, dealers said. Foreign participants likely bought short-term bonds, which supported the prices of these bonds in the secondary market, they said. Some traders also expect such purchases in state bonds, they said. Foreign banks have net bought over INR 157 billion worth of gilts since the RBI's Monetary Policy Committee meeting Friday.  

 

At the state bond auction, traders expect demand to be firm from insurers for long-term bonds, while banks likely bid for short-term papers for their asset liability management books. Some traders expect the cut-off yield on some state bonds to be at a premium, dealers said. Traders expect the spread between the 10-year state bond and gilt of similar maturity to remain at levels similar to last week. According to an Informist poll, the Reserve Bank of India is likely to set a cut-off of 7.65% on Tamil Nadu's 10-year bond at the weekly state bond auction Tuesday. 

 

"Demand at the auction is firm from investors," a dealer at a primary dealership said. "Traders are likely in 5-year to 7-year papers. The overall optimism in the market will also be seen in the state bond auction today (Tuesday)." 

 

The new 10-year 6.94%, 2036 bond traded at a premium for the first time after it was issued. However, the rise in bond prices was capped as traders who had bought this paper at par, booked profits, dealers said. Traders expect the spread between the two 10-year bonds to widen by 4-6 basis points by its next auction, dealers said. At 1232 IST, the new 10-year 6.94%, 2036 bond had a total volume of INR 176.65 billion in the secondary market. This was nearly thrice the volume recorded for the 6.48%, 2035 bond.

 

The total volume in the government securities market at 1232 IST was INR 346.80 billion, higher than INR 232.50 billion at 1232 IST Monday, according to data from the RBI's Negotiated Dealing System.  (Janwee Prajapati)

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India Gilts: Sharply up on hope of robust FPI flows, W Asia war's end

 

--Dealers:Gilts sharply up as Brent futures fall on hope of W Asia war's end 

--Dealers: Gilts sharply up; FPI gilt buys seen robust post RBI FX measures 

 

	0942 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.48%, 2035
PRICE (INR)	96.97	97.12	96.95	96.99	96.78
YTM (%)	6.9243	6.9026	6.9277	6.9217	6.9532

 

	0942 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	100.095	100.25	100.00	100.00	99.88
YTM (%)	6.9255	6.904	6.9389	6.9389	6.9558

 

MUMBAI--0942 IST--Prices of government bonds opened higher as hope of an end to the West Asia war added to the already positive market sentiment after the Reserve Bank of India and the government announced measures to improve foreign inflows, dealers said. Traders expect foreign participants to continue their buying momentum, which will keep the bond prices higher, dealers said.

 

"The market is positive as we (traders) are estimating the amount of inflows we (Indian bond market) will get from foreign players...I am expecting around INR 40 to INR 50 billion," a dealer at a state-owned bank said. "All this, along with the positive global outlook and slight fall in crude is also playing out."

 

Traders expect the short-term bonds to remain in favour Tuesday, similar to Monday, as foreign participants are likely to purchase bonds in this tenure, dealers said. While the yield on the 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.90–6.95% for the rest of the day, some traders expect the yield on the 6.48%, 2035 bond to fall to 6.85%, dealers said. 

 

On war front, hopes of an end to West Asia war improved after Iran said it had ended its latest military operation against Israel, which was the first exchange of fire since the fragile Apr. 8 ceasefire, but cautioned it could deliver a harsher response if provoked. US President Donald Trump urged both Iran and Israel to halt hostilities. Brent crude oil futures for August delivery eased to $93.37 per barrel in early trade from near $95 per barrel at the end of Indian trading hours Monday. 

 

The new 10-year 6.94%, 2036 bond recorded the highest trading volume in early trade for the second consecutive session. The bond recorded INR 99.65 billion of trade volume at 0942 IST which was over 57% of the total trade volume. The total volume in the government securities market at 0942 IST was INR 172.15 billion, sharply higher from INR 52.70 billion at 0930 IST Monday, according to data from the RBI's Negotiated Dealing System.  (Janwee Prajapati)

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India Gilts: Seen up on W Asia ceasefire hopes; buying momentum may continue

 

MUMBAI – Government bond prices are likely to open slightly higher Tuesday, tracking an overnight fall in Brent crude oil prices on hopes of a permanent ceasefire in West Asia, dealers said. Iran's military said it had halted operations against Israel but warned that any further strikes on Iran or Lebanon would trigger a "more crushing" response. Traders are likely to cover their outstanding short positions in the 10-year benchmark 6.48%, 2035 bond, as fresh hopes of a ceasefire are likely to keep yields from rising.  

 

The yield on the 10-year benchmark 6.48%, 2035 government bond is expected to open near 6.95% and move between 6.92% and 6.95% during the day, dealers said. Traders do not expect the bond's yield to go anywhere near 7% Tuesday as they expect the buying momentum from Monday's session to continue, dealers said. Monday, the 10-year benchmark bond ended at INR 96.78, or 6.9532% yield.   

 

On the war front, Iran said it had ended its latest military operation against Israel, which was the first exchange of fire since the fragile April 8 ceasefire, but cautioned it could deliver a harsher response if provoked. President Donald Trump urged both Iran and Israel to halt hostilities, posting on Truth Social: "Israel and Iran must immediately stop ‘shooting.'" He later added that "final negotiations" for peace were underway, "subject to ignorance or stupidity getting in its way."  

 

The latest escalation began when Iran launched missile attacks on Israel, prompting Israeli strikes on military targets inside Iran and raising fears of a broader conflict. Iran's military command said it was halting operations after delivering a "painful response," but warned that any further aggression, including in southern Lebanon, would trigger "much more severe and crushing measures" than before.

 

Brent crude oil prices eased to around $93 per barrel, comfortably below the key $95 per barrel mark. US Treasury yields on the 10-year benchmark note inched higher as investors assessed the fallout from tensions in West Asia and grew less confident that the Federal Reserve would cut rates in the near term.  

 

Traders will also track Tuesday's state government bond auction, in which 10 states plan to raise INR 148 billion, below the INR 182.50 billion indicated in the June-quarter borrowing calendar. Dealers expect demand to exceed supply as investors prefer state bonds for their higher yields relative to government bonds of similar maturity, which should drive competitive bidding. Banks, insurers, and pension funds are likely to be the main buyers, dealers said. Some traders will likely make space in their portfolios for the fresh supply of state bonds, which will also weigh on bond prices, they said.  

 

Traders will also assess the Reserve Bank of India's directions on the swap facility for foreign-currency non-resident deposits for banks and on external commercial borrowing by public sector units, released after market hours on Monday. Foreign participants are likely to continue their buying momentum on Tuesday. The shorter end of the yield curve is likely to perform better as foreign participants are expected to pick up short-term bonds, dealers said.  (Janwee Prajapati)

 

End

 

US$1 = INR 95.35

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

 

Edited by Avishek Dutta

 

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