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Informist, Thursday, Jul. 9, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of most government bonds ended off the day's highs Thursday, tracking the price of Brent crude oil, which rose above $78 per barrel after falling intraday, dealers said. Traders also trimmed bond holdings to make space in their portfolios for the fresh supply at the weekly gilts auction Friday, they said. This, too, weighed on bond prices. Meanwhile, purchases from state-owned banks above 6.75% yield on the 10-year benchmark 6.94%, 2036 gilt supported bond prices, dealers said.

 

The 10-year benchmark bond ended at INR 101.33, up from INR 101.24 Wednesday but down from the intraday high of INR 101.42. The yield on the bond settled at 6.7517% from 6.7636% at the end of the previous session. The 15-year benchmark 6.68%, 2040 bond, which outperformed other bonds in Thursday's trading session, ended at INR 97.41, up over 17 paise from Wednesday's close. Traders attributed the rise in the bond's price to purchases by state-owned banks. Some traders covered short positions in the bond as the outstanding on the bond has hit INR 2.28 trillion and the government is likely to issue a new 15-year bond at the next scheduled auction for the tenure on Jul. 24, dealers said.

 

However, prices of all government bonds across tenures were pulled down by a rise in crude oil prices. Brent crude oil futures for September delivery hit a high of $79.25 per barrel during the day and was at $78.70 per barrel at 1700 IST, almost unchanged from the same time Wednesday but over $2 up from an intraday low of $76.75 per barrel.

 

"Crude and West Asia (war) fears are driving the market again," a dealer at a state-owned bank said. "During the day, crude was down and we saw the 10-year (6.94%, 2036 bond) touching the day's high (price) level."

 

While most dealers echoed the sentiment that higher Brent crude oil price has weighed on market sentiment, some were of the view that the optimism in the market on higher bond prices has toned down but not vanished, with many viewing the current rise in crude oil prices as short-lived, they said. Largely, the rise in crude oil price has also been contained, boding well for gilt prices in the longer run, they said.

 

"People were gung-ho with Brent (crude oil prices) going down to $70-$72 (per-barrel) level, so that optimism now has just paused, but not reverted," a dealer at another state-owned bank said. "Despite Trump's remark (about ending the ceasefire with Iran), crude has not reacted very sharply. People are in a wait-and-watch mode for now."

 

At 1700 IST, the total turnover in the government securities market was INR 578.45 billion, down sharply from INR 935.75 billion at the end of Indian gilt market hours Wednesday, data from Clearing Corp. of India Ltd. showed. Traders maintained caution amid uncertainty around the situation in West Asia, dealers said.       

 

Bond prices were supported by purchases by state-owned banks near 6.75% yield on the 10-year 6.94%, 2036 bond, dealers said. They continued their buying momentum from Wednesday, when they had bought INR 36.20 billion worth of bonds, as per CCIL data. Wednesday, some traders had also speculated about purchases by the Reserve Bank of India after CCIL data showed that "Others", a category of market participants that includes insurance companies, provident funds, and the central bank, were the top buyers of bonds. However, some traders believe these purchases were made by insurers, dealers said.

 

OUTLOOK

Friday, traders will closely track overnight developments in prices of Brent crude oil and US Treasury yields, dealers said. Any escalation in the West Asia war would pull down bond prices and push the yield on the 10-year benchmark bond to 6.80%, dealers said. The 10-year 2036 bond is seen moving between 6.73% and 6.78%, with 6.78?ing seen as the next crucial level for the gilt, dealers said.

 

The result of the weekly gilts auction is also expected to lend cues to bond prices, dealers said. The government will sell INR 210 billion of the 6.36%, 2031 bond and INR 110 billion of the 7.71%, 2066 bond at the auction. Demand is seen to be firm, with banks likely to bid aggressively for the 2031 bond for asset and liability management, dealers said. Meanwhile, insurers and pension funds are likely to bid for the 2066 bond, they said. However, the underwriting fees may be higher for the bonds Friday as geopolitical uncertainty led by fears of resumption of the US-Iran war may dampen demand at the auction, dealers said.

 

Bond prices are likely to take cues from any news about the inclusion of Indian government bonds in Bloomberg's Global Aggregate Index. Traders expect Bloomberg to publish its review between Jul. 15 and the end of the month. Most traders expect an inclusion, though some technical difficulties for foreign portfolio investors purchasing bonds persist, dealers said.

 

Traders are also likely to remain cautious ahead of the release of India's June inflation data Monday, dealers said. The print is expected to be on the higher side, reflecting the rise in energy prices. Deficient southwest monsoon rainfall will also contribute to higher inflation, they said.

 

	THURSDAY		WEDNESDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.3250	6.7517%	101.2400	6.7636%
6.48%, 2035	98.0850	6.7601%	97.9800	6.7757%
6.36%, 2031	99.7000	6.4343%	99.6600	6.4444%
6.68%, 2040	97.4100	6.9727%	97.2400	6.9923%
6.90%, 2065	92.7500	7.4741%	92.5000	7.4953%

 

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India Gilts: Give up some gains as traders trim positions before auction Fri

 

	1545 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.36	101.42	101.19	101.29	101.24
YTM (%)	6.7468	6.7384	6.7712	6.7566	6.7636

 

MUMBAI--1545 IST--Prices of government bonds gave up some gains as traders trimmed bond holdings to make space in their portfolios for fresh supply at the weekly gilt auction Friday, dealers said. An intraday rise in Brent crude oil prices also weighed on bond prices, they said. However, bond prices were supported due to purchases by state-owned banks near 6.75% yield on the 10-year benchmark 6.94%, 2036 bond, they said. 

 

The government will sell INR 210 billion of the 6.36%, 2031 bond and INR 110 billion of the 7.71%, 2066 bond at the auction Friday. Demand at the auction is seen firm, with banks likely to bid aggressively for the 2031 bond for their asset-liability management, dealers said. Meanwhile, insurers and pension funds are likely to bid for the 2066 bond, they said. However, the underwriting fees may be higher for the bonds Friday as geopolitical uncertainty led by the fears of resumption of the US-Iran war may dampen demand, dealers said.

 

"Now the geopolitical situation has changed, again. Fears of war (between the US and Iran) are back," a dealer at a state-owned bank said. "This (US-Iran war fear) may weigh a little on the auction demand." 

 

An intraday rise in Brent crude oil prices also capped gains on bond prices Thursday, dealers said. Brent crude oil futures for September delivery traded at $78.08 per barrel at 1540 IST, up from $76.85 per barrel at 1400 IST. However, state-owned banks likely bought bonds when the yield on the 10-year benchmark 2036 bond remained near 6.75%, which helped bond prices, dealers said. 

 

At 1545 IST, the total turnover in the government securities market was INR 490.05 billion, sharply lower than INR 782.75 billion at 1530 IST Wednesday, according to data from Clearing Corp. of India Ltd. Traders maintained caution amid uncertainty around the resumption of the West Asia war which kept the volume in the secondary market lower Thursday, dealers said.  

        

Traders will closely track any development related to escalation in West Asia, which may impact Brent crude oil prices and in turn, bond prices, dealers said. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.72-6.78% range during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Remain up on PSU bks' buys, intraday fall in Brent crude prices

 

	1400 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.41	101.42	101.19	101.29	101.24
YTM (%)	6.7405	6.7384	6.7712	6.7566	6.7636

 

MUMBAI--1400 IST--Prices of government bonds remained higher, owing to purchases by state-owned banks near 6.75% yield on the 10-year benchmark 6.94%, 2036 bond, dealers said. Bond prices were also supported by an intraday drop in prices of Brent crude oil, dealers said.  

 

Some traders also maintained caution amid uncertainty around the US-Iran war, which weighed on market sentiment, affecting the trade volume Thursday, dealers said. At 1400 IST, the total turnover in the government securities market was INR 402.75 billion, sharply lower than INR 621.90 billion at 1430 IST Wednesday, according to data from Clearing Corp. of India Ltd.

 

Bond prices remained supported as Brent crude oil prices continued to trade near $77 per barrel after crossing $80 per barrel overnight on fears of resumption of the US-Iran war, dealers said. Brent crude oil futures for September delivery were at $76.85 per barrel at 1400 IST, down from $78.92 per barrel at 0900 IST. 

 

"The market is tracking crude, now that (US-Iran) war fears are back on the table," a dealer at a state-owned bank said. "PSU buying (purchases by state-owned banks) is what is holding the market. But crude is the main factor, no doubt." 

 

On Thursday, public sector banks continued their buying momentum from the previous trading session, when they had bought bonds worth INR 36.20 billion, which helped bond prices, dealers said. State-owned banks likely bought bonds when the yield on the 10-year benchmark 2036 bond remained near 6.75%, which was seen as attractive by them, dealers said.

 

Traders will closely track any developments related to escalation in West Asia, which may impact Brent crude oil prices and in turn, bond prices, dealers said. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.72-6.78% range during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Up on intraday fall in Brent crude oil prices, short covering

 

	1234 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.35	101.40	101.19	101.29	101.24
YTM (%)	6.7482	6.7416	6.7712	6.7566	6.7636

 

MUMBAI--1234 IST--Prices of government bonds rose to the day's high as Brent crude oil prices fell intraday, dealers said. Some traders also covered short positions as they expected a recovery in bond prices driven by purchases by public sector banks and a fall in crude oil prices, dealers said. Traders also remain hopeful of the inclusion of Indian bonds in Bloomberg's Global Aggregate Index, which also supported bond prices, dealers said. Intraday fall in Overnight Indexed Swap rates also helped, dealers said.  

 

"There is buying at 20-25 paise (INR 101.20-INR 101.25, price on 10-year benchmark 6.94%, 2036 bond)...it is a good support level," a dealer at a public sector bank said. "I think the yield (on 10-year benchmark 6.94%, 2036 bond) can remain between 6.73-6.77% today (Thursday)...it will depend on movement in crude oil."    

 

Brent crude futures for September delivery were below $78 per barrel in early trade, down from over $80 per barrel overnight, and from $78.43 per barrel at the end of Indian trading session Wednesday, which supported bond prices, dealers said. Crude oil prices likely slipped after US President Donald Trump said Iran wanted to negotiate, media reports said. However, he also raised doubts over whether Iran could be trusted to honour any future deal.

 

Some traders also speculated on purchases from the Reserve Bank of India in the secondary market after the 'Others' segment of market participants turned top buyer on Wednesday and bought INR 64.41 billion worth of gilts, dealers said. Some traders expect such purchases due to redemption of the 8.33%, 2026 bond Thursday. However, others said the purchases were likely from insurance companies. The 'Others' segment of market participants includes insurance companies, provident funds and the central bank.

 

The focus will also remain on any news regarding the inclusion of Indian bonds in Bloomberg's Global Aggregate Index. Traders expect Bloomberg to publish its review between Jul. 15 and the end of the month. Most traders expect an inclusion which supported bond prices, dealers said.

 

The total volume in the government securities market at 1234 IST was INR 318.15 billion, higher than INR 295.35 billion at 1235 IST Wednesday, data from Clearing Corp. of India Ltd. showed. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.70-6.78% range during the day, dealers said.  (Janwee Prajapati)

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India Gilts: Give up early gains on rise in oil prices; short covering helps

 

	1010 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.22	101.33	101.19	101.29	101.24
YTM (%)	6.7670	6.7510	6.7712	6.7566	6.7636

 

MUMBAI--1010 IST--Prices of government bonds gave up early gains and were slightly lower due to a rise in Brent crude oil prices amid escalation in the West Asia war, dealers said. Some traders are likely to make space in their portfolios for the fresh supply of gilts at its auction Friday, which also weighed on bond prices, dealers said. Bond prices opened higher as public sector banks likely bought bonds at levels seen as attractive. Some traders covered their short positions, which also supported bond prices, dealers said.

 

"Public sector banks must be buying...levels are really good," a dealer at a public sector bank said. "We were around 6.67% levels, and now we are at 6.77%, almost 10 basis points...people must have covered their short bets also in early trade."

 

Some traders expect the yield on the 10-year benchmark 6.94%, 2036 bond to oscillate between 6.75% and 6.78%, dealers said. However, if the yield breaches the lower end of the range, then it is likely to fall to 6.72%, dealers said. The bond yield is likely to rise above 6.78% if there is an escalation in the West Asia war and Brent crude oil rises further, dealers said. Brent crude futures for September delivery were at near $79 per barrel, slightly down from over $80 per barrel overnight, but higher from $78.43 per barrel at the end of Indian trading session Wednesday. 

 

Public sector banks likely purchased 6.94%, 2036 bonds at 6.76% yield, a level they considered attractive, dealers said. These banks bought INR 36.20 billion of gilts on Wednesday. Some traders also covered short bets amid uncertainty in the West Asia war, dealers said. Some traders also speculated purchases from the Reserve Bank of India in the secondary market after the 'Others' segment of market participants turned top buyer on Wednesday and bought INR 64.41 billion worth of gilts, dealers said. However, others said the purchases were likely from insurance companies. The 'Others' segment of market participants includes insurance companies, provident funds and the central bank.

 

Traders also feared sales from foreign investors amid escalations in the West Asia war as they are likely to prefer a safer option amid uncertainty, dealers said. Foreign banks net sold INR 30.63 billion worth of gilts Wednesday which soured market sentiments, dealers said.  

 

The total volume in the government securities market at 1010 IST was INR 94.65 billion, lower than INR 145.10 billion at 1030 IST Wednesday, data from Clearing Corp. of India Ltd. showed. The yield on the benchmark 10-year 6.94%, 2036 bond is expected to move in the 6.70-6.78% range during the day, dealers said.  (Janwee Prajapati)

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India Gilts: Seen lower on rise in Brent crude oil to $80/bbl

 

MUMBAI – Prices of government bonds are likely to open lower tracking a rise in Brent crude oil prices which rose to $80 per barrel, dealers said. Traders are likely to refrain from building aggressive positions given the renewed escalation in the West Asia war and ahead of the release of India's June inflation data Monday, dealers said. Some traders are likely to make space in their portfolios for the fresh supply of gilts at its auction Friday, which is likely to weigh on bond prices, dealers said.

       

The 10-year benchmark 6.94%, 2036 is seen opening near 6.78% Thursday and is expected to move in a 6.75-6.80% range during the day. The bond had ended at INR 101.24 Wednesday, down from INR 101.73 Tuesday. The yield closed at 6.7636% Wednesday, up nearly 7 basis points from Tuesday. Traders do not expect the yield on the said bond to rise above 6.80% on Thursday unless there is any escalation in the West Asia war, dealers said.   

 

The yield on the 10-year US Treasury benchmark note was largely unchanged at 4.58% in early trade Thursday from the end of Indian trading hours Wednesday. According to the minutes of the June Federal Open Market Committee meeting, Federal Reserve officials were divided on prospects of future policy rates. In line with Fed chair Kevin Warsh's criticism of forward guidance, the summary offered little clarity on policymakers' path ahead, saying decisions would depend on "incoming information."

 

Brent crude futures for September delivery were at over $79 per barrel in early trade, slightly down from over $80 per barrel overnight, but higher from $78.43 per barrel at the end of Indian trading session Wednesday. Crude oil prices rose past $80 per barrel as the US and Iran traded strikes again Wednesday night, hours after President Trump declared an eight-week ceasefire was "over". According to a senior US official, American forces hit missile and drone facilities near the Strait of Hormuz, while Iran targeted Kuwait and Bahrain, where US bases are located. In a social media post, Trump called the strikes' payback for Iranian attacks on commercial ships near the strait earlier this week, adding, "If it happens again, it will get much worse!" US Central Command said the goal was to degrade Iran's ability to threaten traffic in the Strait and to hold Tehran responsible for attacks on civilian shipping.

 

Back home, the focus will also remain on foreign inflows--both in government bonds and through the various measures the RBI had announced last month to shore up capital--and any news regarding the inclusion of Indian bonds in Bloomberg's Global Aggregate Index. Traders expect Bloomberg to publish its review between Jul. 15 and the end of the month. Most traders expect an inclusion, dealers said. However, prior to Wednesday, traders had bets of the 10-year benchmark yield falling to 6.65% or below, but they now expect a broad range of 6.68% to 6.85%. On the upside, traders may step in to buy gilts at the 6.78% yield, they said. 

 

Traders are likely to stay cautious ahead of the release of India's June inflation data Monday. The reading is expected to come in higher, driven by rising energy prices and weaker rainfall. Earlier, traders had anticipated inflation would ease gradually as energy costs fell earlier. However, renewed tensions in West Asia have revived concerns that higher inflation could hurt market sentiment and push the Reserve Bank of India's Monetary Policy Committee towards a rate hike. As a result, traders who had scaled back bets on a rate increase this calendar year now expect one in the second half of the current financial year, dealers said.

 

On the auction front, the government is set to sell INR 320 billion of bonds Friday, comprising the 6.36 31 paper and the 7.71 66 paper. Dealers said demand for the bonds is likely to remain strong. However, primary dealers may seek a higher underwriting commission for Friday's sale.  (Janwee Prajapati)  End

 

US$1 = INR 95.38

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

 

Edited by Rajeev Pai

 

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