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Informist, Tuesday, Jun. 30, 2026

 

By Cassandra Carvalho

 

MUMBAI – Prices of government bonds ended steady on the last day of the June quarter Tuesday, pulling back from the day's highs near the end of trade. In a sharp turn of events, prices retreated in the final hour of trade on profit sales after hefty purchases earlier in the session had pulled the 10-year benchmark 6.94%, 2036 bond yield below 6.70% for the first time since Mar. 17. 

 

"Maybe profit-booking only. 6.70% (yield on the 10-year benchmark bond) was a technical level. It was the 200-day moving average which was tested and didn't break so it reversed, that's all," a dealer at a private-sector bank said. The 10-year benchmark bond yield had hit a low of 6.6966%.

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 101.34, little changed from INR 101.33 Monday. The yield on the bond settled at 6.7501%, against 6.7515% at the end of the previous session. The 10-year benchmark bond yield has fallen 28 basis points this quarter while the five-year benchmark yield has fallen 35 bps. When prices had risen earlier in the session, the five-year benchmark 6.36%, 2031 bond price had hit the day's high of INR 99.90, performing well after several sessions of lacklustre trade when dealers had preferred long-term paper.

 

The sharp rise in prices Tuesday was across the yield curve, unlike on Monday, when the rise in prices was centred in long-term bonds, dealers said. Tuesday, most bonds, including long-term ones, pulled back to end steady. The 15-year 6.68%, 2040 bond eked out a minor rise of 7 paise to end at INR 97.36 after hitting the day's high of INR 97.73.

 

A large investor--which had most likely picked up the 6.68%, 2040 bond at auction Friday--likely sold gilts across the yield curve at a large profit Tuesday, dealers said. At Friday's auction, the Reserve Bank of India had accepted only four competitive bids for the INR 170-billion supply of the 15-year benchmark bond. Several traders said the sharp rise in prices Tuesday had been unwarranted and was due for reversal. "This only shows our market is shallow at these levels (lower yields)," a dealer at another private-sector bank said. 

 

Bond prices had risen with positive momentum building up the past two sessions, with the view that foreign portfolio investors' purchases could pull the 10-year benchmark yield to as low as 6.60% in the near term, and below the pre-war level of 6.66%, especially if Bloomberg adds Indian sovereign bonds to its flagship Global Aggregate Index, dealers said. A few traders expected the announcement of Bloomberg's review Tuesday, though others said it could come in July or even September. A fall in Brent crude oil prices to stabilise around $73 per barrel also aided the "bullish" sentiment, dealers said. Foreign portfolio investors and domestic banks had purchased gilts aggressively earlier in the session, dealers said. As of 1800 IST, FPIs net sold gilts worth INR 370.90 million Tuesday through the Fully Accessible Route, as per data from Clearing Corp. of India. This quarter, FPIs have net bought gilts worth a whopping INR 505.19 billion through the Fully Accessible Route, of which net purchases worth nearly INR 398 billion have been in June.

 

Several traders hit their targets when the 10-year yield hit 6.70%, leading to profit sales, dealers said. Despite the quarter-end, major purchases were not made for book valuations, and while there was profit-taking, traders were switching gilts earlier in the session, dealers said. Traders switched between the 10-year benchmark, the erstwhile 10-year benchmark 6.48%, 2035 bond, and the 15-year benchmark bond, they said.

 

The strong appetite was reflected in the cut-off yields at the INR 136-billion state bond auction, dealers said. News of CCIL receiving the European Securities and Markets Authority's recognition as a tier-I Third Country Central Counterparty, effective Tuesday, also aided sentiment, dealers said. The total turnover in the gilt market was INR 931.30 billion, sharply up from INR 676.50 billion Monday.

 

OUTLOOK

Wednesday, traders are likely to be cautious after the sharp rise and fall in prices Tuesday, both of which were unexpected at this scale, dealers said. Traders will track CCIL data on the buyers and sellers in the secondary gilt market to confirm speculation for the erasure of gains Tuesday, they said. Any significant development in the peace negotiations between the US and Iran and the movement of US Treasury yields will also lend cues, dealers said. Several traders were expecting the yield on the 10-year benchmark bond to fall to 6.60% in the near term, but some of those bets faded after Tuesday, they said.

 

Traders will also keep an eye on key US jobs data. The Job Openings and Labor Turnover Survey report for May, which measures US job openings, is scheduled for release Tuesday. The June non-farm payrolls report, tracking jobs added in the month, follows Thursday. Investors will closely examine both to assess the strength of the US economy as that will have a bearing on US policy rate decisions, dealers said.

 

Traders also eye the INR 340-billion supply of the 6.94%, 2036 bond at auction Friday, which is likely to limit a fall in its yield this week and also weighed on the market Tuesday, dealers said.

 

Traders remain optimistic that Indian sovereign bonds will be added to Bloomberg's flagship Global Aggregate Index. If the inclusion proceeds, they expect India's Fully Accessible Route bonds to account for 0.8-1.0% of the index. Bloomberg had said in its September consultation note that a weight of 0.7% was under consideration.  

 

	TUESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.3400	6.7501%	101.3300	6.7515%
6.48%, 2035	98.0000	6.7722%	98.0025	6.7718%
6.36%, 2031	99.7375	6.4241%	99.7300	6.4259%
6.68%, 2040	97.3550	6.9786%	97.2850	6.9866%
6.90%, 2065	93.2000	7.4361%	93.2000	7.4361%

 

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India Gilts: Pull back on profit-taking after 10-year yield falls to 3-month low

 

	1626 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.43	101.73	101.34	101.36	101.33
YTM (%)	6.7376	6.6966	6.7501	6.7473	6.7515

 

MUMBAI--1626 IST--Prices of government bonds pulled back a little on profit-taking after having risen sharply earlier in the day. Traders said the 10-year benchmark yield failed to break its 200-day moving average, leading to profit-taking. A few speculated that the government's fiscal deficit data, released at 1600 IST, led to the prices retreating, they said. The fall in the 10-year yield below the key 6.70% level made the case for profit sales, dealers said, while any fiscal slippage in government finances due to the war in West Asia is seen as short-lived, most dealers said.

 

Prices had surged to the day's high with optimism in the market that bond yields will fall further, with purchases from both domestic players and foreign portfolio investors across the yield curve, dealers said. Some traders hit stop-losses on their short bets when the yield on the 10-year benchmark bond fell below 6.71% and was nearing the key 6.70% level, which resulted in the benchmark yield falling below 6.70% for the first time since Mar. 17, they said. The result of the INR 136-billion state bond auction also indicated strong appetite for bonds, they said.

 

Prices of long-term bonds rose further with increased investor interest in the segment, dealers said. Most traders attributed the interest in long-term bonds to demand from FPIs as well as insurers, they said. A Goldman Sachs report, which recommended that global investors buy 30-year Indian sovereign bonds, aided the preference for these bonds, dealers said. Other traders called the rise in long-term bond prices long overdue, as only short-term bonds had witnessed upward price action since the Reserve Bank of India's Monetary Policy Committee meeting, where the central bank had announced measures to attract capital. The 7.24%, 2055 bond was among the top five traded bonds Tuesday with volume worth INR 20.30 billion at 1554 IST, data from Clearing Corp. of India Ltd. showed. 

 

"Only the short-term bonds have moved since the MPC meeting," a dealer at a state-owned bank said. "The move in long-term (bonds) was long overdue. The longer end of the curve has to go up (in price terms), and now it is happening. FPI action is also heavy in the market today (Tuesday) so that is also helping bond prices."

 

The 15-year 6.68%, 2040 bond was also sharply up due to purchases from foreign banks, dealers said. Some traders also attributed the price rise and heavy volume in the 15-year bond to spread trades where dealers likely bought the 15-year benchmark paper and sold the 10-year benchmark paper on expectations of the spread between the two shrinking, dealers said.

 

"There is spread trade between 10 and 15 (10-year gilt and 15-year gilt)," a dealer at another state-owned bank said. "Spreads may shrink further between the two, with long-term yields likely to fall more."

         

At the auction of state government securities Tuesday, five states raised INR 136 billion through the sale of bonds. Long-term paper at the auction saw aggressive bidding from insurers, while banks are likely to have picked up shorter-term bonds for their asset and liability management, dealers said. The cut-off yields on states' 13-year bonds at auction were 7.53-7.62%, slightly lower than an Informist Poll estimate of 7.58-7.62%.

 

"Demand was strong because most of the papers (at the auction) were long term and the amount was very small," a dealer at a private-sector bank said. "For Punjab's four-year paper, the demand was good from banks."

 

At 1622 IST, the total turnover in the government securities market was INR 844.35 billion, up from INR 654.30 billion at 1530 IST Monday, as per CCIL data. The yield on the 10-year benchmark 6.94%, 2036 bond is expected to move in the 6.68-6.77% range during the day, dealers said.(Diksha Tripathy and Cassandra Carvalho)

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India Gilts: Rise more, likely FPI buys aid; 10-yr benchmark yld at 15-wk low

 

	1159 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.5475	101.58	101.34	101.36	101.33
YTM (%)	6.7212	6.7174	6.7501	6.7473	6.7515

 

MUMBAI--1159 IST--Prices of government bonds rose further, likely due to inflows from foreign portfolio investors and purchases by domestic banks with the view that the 10-year benchmark bond yield could fall below its pre-war level of 6.66% to as low as 6.60% in the near term, dealers said. The yield on the 10-year benchmark 6.94%, 2036 yield fell below the key 6.75% level to its lowest since Mar. 18 on Tuesday. Positive sentiment prevailed in the market due to expectations of the inclusion of Indian bonds in the Bloomberg Global Aggregate index, and some traders expect the announcement Tuesday, dealers said. 

 

"Market is expecting Bloomberg inclusion news today (Tuesday) itself, as this is last day of this quarter," a dealer at a private sector bank said. Some traders, however, said the review was unlikely to be published this month since client meetings with the index provider on the inclusion have only recently begun, they said. Further, a fall in Brent crude oil prices to around $70-$72 per barrel bode well for gilt prices, and reduced fears of imported inflation in India, which is a net importer of crude, dealers said. 

 

While the view of yields falling further helped, some market participants whose bids were not accepted at the gilt auction Friday covered their short positions in the 6.68%, 2040 bond, dealers said. The Reserve Bank of India had accepted only four competitive bids for INR-170-billion supply of the bond Friday.

 

At the state government bond auction conducted Tuesday, dealers said there was firm demand from insurance companies and other investors for long-term bonds, especially those issued by Telangana. With a small notified size of INR 136 billion scheduled to be raised by five states at the auction, dealers expect aggressive bids, especially for bonds maturing in 13 years and above. Long-term gilt prices have outperformed other tenures this week on quarter-end demand from insurers, dealers said. Some domestic banks also purchased long-term gilts for capital gains, they said. There was demand from banks' asset and liability managers for Punjab's four-year bond at the auction, dealers said. 

 

Traders now await the result of the state bond auction and any news of the inclusion of Indian sovereign bonds in Bloomberg's flagship index. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.70-6.75% range during the day, dealers said. They expect the yield to fall below the key level of 6.70%, but most dealers do not expect it to sustain below that Tuesday due to profit-booking. Some dealers said the yield will sustain below 6.70% only if the US and Iran sign a peace deal.   

 

At 1159 IST, the total volume in the government securities market stood at INR 356.35 billion, up from INR 220.90 billion at 1130 IST Monday, according to data from Clearing Corp. of India Ltd.  (J. Navya Sruthi) 

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India Gilts: Tad up as traders cover short positions; profit-booking weighs

 

	0930 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.38	101.40	101.34	101.36	101.33
YTM (%)	6.7445	6.7417	6.7501	6.7473	6.7515

 

MUMBAI--0930 IST--Prices of most government bonds edged higher in early trade, with long-term bonds outperforming as traders covered short positions in bonds maturing in 10 years and above, dealers said. However, the gains were capped as some traders booked profits after the yield on the benchmark 10-year 6.94%, 2036 bond approached the 6.74% level, dealers said.

 

The total turnover was marginally higher as traders remained optimistic about the ongoing US-Iran peace talks, with no fresh developments denting sentiment, dealers said. At 0930 IST, the total volume in the government securities market stood at INR 51.30 billion, slightly up from INR 50.70 billion at the same time Monday, according to data from Clearing Corp. of India Ltd.

 

Traders also bought bonds at levels seen as attractive, on expectations that the yield on the benchmark 10-year paper could ease further to around 6.66?ter breaking below the key technical resistance of 6.75%, dealers said. The 15-year 6.68%, 2040 bond outperformed after traders who were unable to secure their intended allotment in Friday's auction covered their short positions, lending additional support to the paper, they said.

 

"There is heavy short covering in the 15-year bond," a dealer at a state-owned bank said. "The 10-year and longer-tenure papers are moving in tandem with the 15-year paper. There is also some fresh buying because the 6.75% level on the benchmark 10-year 6.94%, 2036 bond has been breached."

 

The rise in bond prices was limited by a slight increase in Brent crude oil prices, dealers said. Brent crude futures for August delivery were trading near $73 per barrel at 0930 IST, up from a little over $72 per barrel at the close of Indian gilt market hours on Monday. Traders will continue to monitor developments related to the situation in West Asia, as any movement in crude oil prices could influence bond yields. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.72-6.77% range during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen steady; US-Iran talks, state bond auction result eyed

 

MUMBAI – Prices of government bonds are seen opening steady amid uncertainty about US-Iran peace talks and lack of fresh cues, dealers said. Traders are likely to refrain from placing aggressive bets in the market as they await peace talks between the US and Iran scheduled later on Tuesday in Doha, they said. Traders will also track the result of the auction of state government securities Tuesday, dealers said.             

 

The 10-year benchmark 6.94%, 2036 bond is seen opening near 6.75% and moving in a range of 6.75-6.80%, dealers said. The bond had ended at INR 101.33 on Monday, up from INR 101.21 Thursday. The yield on the bond settled at 6.7515%, against 6.7690% at the end of the previous session. 

 

Dealers said the benchmark has struggled to sustain a move below the key 6.75% mark, with traders consistently booking profits whenever yields approach that level. They said a decisive break below 6.75% could open the way for yields to fall towards the next technical resistance at 6.68%.

 

Some dealers also expect the benchmark yield to decline further, potentially to 6.60%, if Indian government bonds are included in Bloomberg's flagship Global Aggregate Index. Traders remain optimistic that such an announcement could come in the coming months. If included, India's Fully Accessible Route bonds are expected to account for 0.8-1.0% of the index, compared with the 0.7% weight Bloomberg had proposed in its consultation paper released in September.

 

Traders will also monitor the result of the state bond auction, at which five states are scheduled to raise a total of INR 136 billion, dealers said. The notified amount is in line with the Jul-Sep borrowing calendar, and dealers expect the relatively small supply to attract firm demand, they said. Banks, insurance companies, and pension funds are likely to bid aggressively at the auction, dealers said.

 

Trading volumes are expected to remain subdued as investors will likely stay on the sidelines ahead of developments in the US-Iran negotiations, dealers said. Although negotiating teams from both countries are due to be in Doha this week, Iran said Monday that no meeting had been scheduled after weekend missile exchanges tested the interim ceasefire. US President Donald Trump has tasked his son-in-law Jared Kushner and special envoy Steve Witkoff with leading the American delegation, according to a Reuters report. Iran, meanwhile, said its technical delegation's visit to Qatar is unrelated to the US team's presence and reiterated that no direct talks are currently planned. Dealers said any meaningful progress in the negotiations is likely to influence Brent crude oil prices, which remain a key driver of domestic bond yields.

 

Apart from geopolitical developments, traders will closely watch key US labour market data this week for signals on the Federal Reserve's policy outlook. The May Job Openings and Labor Turnover Survey (JOLTS) report is due later on Tuesday, followed by the June non-farm payrolls report on Thursday. The data will be scrutinised for clues on the strength of the US economy and the likely path of US interest rates.

 

Market participants will also keep an eye on Friday's INR 340-billion auction of the new 6.94%, 2036 bond. Dealers said some investors may begin creating room in their portfolios ahead of the supply, while others could initiate short positions to cover them at lower prices during the auction, both of which may weigh on bond prices in the run-up to the sale.  (Diksha Tripathy)

 

End

 

US$1 = INR 94.66

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

 

Edited by Rajeev Pai

 

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