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Informist, Wednesday, Aug. 12, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of most government bonds gave up gains in choppy trade Wednesday as traders booked profits when the yield on the 10-year benchmark 6.94%, 2036 bond remained near the day's low of 6.77%, dealers said. Bond prices had risen in the second half of the trading session Wednesday as Brent crude prices fell following a news report that the US and Iran have agreed to extend the ceasefire, dealers said. Barring a fall in prices Tuesday, long-term papers outperformed for the fifth session Wednesday. India's retail inflation was also in line with the market view, which helped bond prices Wednesday, dealers added.

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 101.13, slightly up from INR 101.12 Tuesday. Its yield settled at 6.7776%, similar to 6.7791% Tuesday. During the day, the 10-year benchmark bond moved between 6.77% and 6.79%. Traders expect Indian bond yields to remain up, tracking crude oil prices, they said.

 

On Wednesday, Brent crude oil futures for October delivery touched the day's low of $88.10 per barrel after the US-Iran ceasefire report, which helped bond prices, dealers said. Near-month Brent crude oil prices were at $88.95 per barrel at the end of the Indian gilt market hours, higher than $87.79 per barrel at 1700 IST Tuesday, but lower than the day's high of $90.07 per barrel. 

 

"Some profit taking was definitely there after crude came down, but volatility is still there," a dealer at a private sector bank said. "Despite the ceasefire news, crude didn't go below 85 level ($85 per barrel) because the market is of the view that this ceasefire may not hold."

 

 

Following a rise in bond prices, traders booked profits after the yield on the 10-year benchmark bond hit the day's low of 6.77%, which capped the gains, dealers said. Some traders saw the rise in prices as an opportunity to exit positions amid the West Asia war-led uncertainty, dealers said.         

 

On Wednesday, long-term papers ended sharply higher amid robust investor demand in the market, dealers said. The 7.71%, 2066 bond ended at INR 102.95, 30 paise higher than on Tuesday. Traders attributed the sharp rise in prices to the lower supply of INR 100 billion of long-term bonds at the weekly gilt auction Friday. Some foreign portfolio investors also bought these bonds, which pushed prices higher, some dealers said. The long-term papers also attracted interest from banks and traders with reduced bets of imminent rate hikes by the Reserve Bank of India's Monetary Policy Committee, dealers said.  

 

The view of a delayed rate hike was strengthened after India's CPI inflation print for July came in at 4.45%, slightly higher than the RBI's target of 4% but well within the tolerance band of 2-6%, dealers said. The inflation data for July was largely in line with the market view of 4.4%, dealers said. India's core inflation, excluding food and fuel inflation, for July fell to 3.9% from 4.1% in June. Traders termed lower core inflation a relief for the market. Traders' focus on core inflation figures had increased after RBI Governor Sanjay Malhotra emphasised more on core inflation at the policy meeting last week, they said. 

 

"The headline number is exactly what market expected, even the lower core inflation number was expected," a dealer at a state-owned bank said. "So, really this CPI number doesn't make any difference to the market. It is looking like crude is the only play right now."

 

Trading activity in the market picked up later in the day after Brent crude oil prices fell. Purchases by FPIs and foreign banks also helped bond prices, dealers said. The total turnover in the government securities market at 1700 IST was INR 435.80 billion, as against INR 512.95 billion at 1700 IST Tuesday, data from the Clearing Corp. of India Ltd. showed.

 

Bond prices did not react much to the result of the Treasury bill auction as it was within expected lines, dealers said. Bids for the 182-day were robust, with the central bank accepting only 10 of the 91 bids for the bill. Primary dealerships aggressively bought stock to fulfil their half-yearly success ratio targets, a trader at a primary dealership said. The central government had invited bids to raise INR 240 billion from the sale of 91-day, 182-day, and 364-day T-bills Wednesday. 

 

OUTLOOK

On Thursday, gilt prices may take direction from developments in the war in West Asia and their impact on crude oil prices and US Treasury yields, dealers said. Traders await the release of US CPI inflation data, which may provide cues to global markets, dealers said. 

 

The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.72% and 6.82% Thursday, dealers said. Any significant movement in the rupee and swap rates will also lend cues, dealers said. 

 

	WEDNESDAY		TUESDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.1300	6.7776%	101.1200	6.7791%
6.48%, 2035	98.0300	6.7707%	98.0000	6.7752%
6.36%, 2031	99.9700	6.3675%	99.9500	6.3726%
7.06%, 2041	100.7300	6.9801%	100.6875	6.9847%
7.24%, 2055	98.3400	7.3794%	97.9800	7.4101%

 

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India Gilts: Remain up as India's July inflation in line with market view

 

	1618 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.14	101.22	101.03	101.05	101.12
YTM (%)	6.7759	6.7653	6.7917	6.7889	6.7791

 

MUMBAI--1618 IST--Prices of government bonds remained up after India's retail inflation print for July was in line with traders' view, dealers said. Bond prices were also supported by an intraday fall in prices of Brent crude oil, they said.

 

India's CPI inflation was at 4.45% on year in July, similar to that in June and largely in line with an Informist poll median of 4.40%. Core inflation, which excludes fuel and food inflation, fell to 3.9% in July from 4.1% in June. Traders termed lower core inflation a relief for the market. The focus on core inflation figures had increased after Reserve Bank of India Governor Sanjay Malhotra emphasised more on core inflation at the policy meeting last week. 

 

"Some people were fearful that there might be higher numbers," a trader at a primary dealership said. "Since there is no surprise now, market is holding the levels we saw before the CPI numbers."

 

After the domestic data, traders now await the release of US CPI inflation at 1800 IST. Inflation in the US is seen at 3.4% on year in July, as per a survey compiled by The Wall Street Journal. A rate hike by the Federal Open Market Committee in 2026 is seen putting pressure on the RBI to tighten monetary policy and its Monetary Policy Committee to raise interest rates, dealers said.

 

The total trade volume in the government securities market at 1618 IST was INR 387.10 billion, down from INR 422.85 billion at 1630 IST Tuesday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.76–6.82% for the rest of the day.  (Diksha Tripathy)

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India Gilts: Up, reverse early fall on report of US-Iran ceasefire extension

 

	1500 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.1825	101.22	101.03	101.05	101.12
YTM (%)	6.7702	6.7653	6.7917	6.7889	6.7791

 

MUMBAI--1500 IST--Prices of government bonds rose, reversing an early fall, and volumes increased, tracking a fall in Brent crude oil prices after Turkish state-run news agency Anadolu reported that the US and Iran had agreed to extend the 60-day ceasefire which expires Monday, citing government sources from Pakistan. Near-month Brent crude oil prices fell below $89 per barrel on the news, from $90 per barrel earlier in the session. Traders covered short bets, though gains wavered amid caution ahead of the release of India's CPI inflation data for July at 1600 IST. Trade in gilts was lacklustre prior to the intraday fall in oil prices. 

 

Long-term bonds continued to outperform other tenures this week, with some foreign portfolio investors also purchasing these bonds, dealers said. Demand from insurance companies and pension funds was robust for these tenures, with low supply of INR 100 billion of long-term bonds at the weekly gilt auction Friday. This has also attracted interest from banks and traders for these bonds, especially since traders have pared bets of imminent rate hikes by the Reserve Bank of India's Monetary Policy Committee, dealers said.  

 

"The 6.76%, 2061 (bond) has been dealt, FPIs are in that paper today (Wednesday)," a trader at a primary dealership said. "Now that rate hikes are also not being expected, there is some flattening (of the yield cruve) happening and longer-end is performing."

 

The result of the Treasury bill auction was within expected lines. Bids for the 182-day were robust, with the central bank accepting only 10 of 91 bids for the bill. Primary dealerships aggressively bought stock to fulfil their half-yearly success ratio targets, a trader at a primary dealership said. 

 

The total trade volume in the government securities market at 1500 IST was INR 303.95 billion, slightly lower from INR 346.65 billion at 1530 IST Tuesday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.75–6.82% during the day. (Cassandra Carvalho)

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India Gilts:Off lows as Brent crude remains below $90/bbl; PSU bks' buys aid

 

	1215 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.10	101.13	101.03	101.05	101.12
YTM (%)	6.7822	6.7776	6.7917	6.7889	6.7791

 

NEW DELHI--1215 IST--Government bond prices were off lows as traders picked up gilts when Brent crude for October delivery failed to sustain above $90 per barrel, dealers said. Firm demand from state-owned banks also kept losses limited as the 10-year benchmark 6.94%, 2036 gilt's yield neared 6.80%, they said. 

 

An overnight rise in crude prices had led to a fall in gilt prices early as traders feared higher imported inflation with the Strait of Hormuz effectively shut once again, dealers said. However, Brent crude for October delivery retreated to near $89 a barrel at 1215 IST after briefly touching $90 on both Tuesday and Wednesday, which bond traders saw as a positive. Moreover, Reserve Bank of India Governor Sanjay Malhotra's comment on Tuesday that inflation was largely under check seemed to suggest that monetary policy tightening in response to crude oil prices rising would be delayed or limited, dealers said. 

 

"The market is closely watching crude and even after all the bad news, it doesn't look like it has any legs in the $90-$95 (per barrel) zone," a dealer at a private-sector bank said. "As long as the governor is dovish and the market expects FCNR (foreign currency non-resident banks deposits) inflows to keep coming in, there will be buying interest."

 

Foreign and private-sector banks continued to buy gilts maturing in three to seven years in order to match the increase in their liabilities from the deposits, dealers said. Mutual funds and state-owned banks were selling these short-term gilts and some were opting to buy longer term bonds, while others chose to receive overnight indexed swap rates, dealers said. 

 

Traders expect only a limited movement in gilt prices for the rest of the day before the release of India's CPI data for July at 1600 IST. An Informist Poll of economists pegged the print at 4.4%, the same as June, with bond traders also expecting a 4.3-4.4% reading. A rise in CPI inflation above 4.5% may pull down bond prices, while a reading near 4% could lead to a rise in bond prices as it would make the case for an extended pause in the policy repo rate rather than a hike, dealers said.

 

Even after the domestic data, reactions may be muted before the release of US CPI inflation at 1800 IST. CPI inflation in the US is seen rising 3.4% on year in July, as per a survey compiled by The Wall Street Journal. A rate hike by the Federal Open Market Committee in 2026 is seen putting pressure on the RBI to tighten monetary policy and its Monetary Policy Committee to raise interest rates, dealers said.

 

The total trade volume in the government securities market at 1215 IST was INR 146.30 billion, sharply down from INR 218.40 billion at 1230 IST Tuesday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.76–6.82% during the day. (Aaryan Khanna)

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India Gilts: Down as Brent crude prices rise to $90/bbl; volume low

 

	0936 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.05	101.08	101.03	101.05	101.12
YTM (%)	6.7896	6.7847	6.7917	6.7889	6.7791

 

MUMBAI–-0936 IST--Prices of government bonds were down tracking an overnight rise in prices of Brent crude oil, dealers said. The fading hopes of a peace deal between the US and Iran also dampened the risk appetite of traders, which kept the volume low, they said. Traders also refrained from building aggressive positions as they await India's CPI inflation data for July, which will be released at 1600 IST, dealers said.  

 

Brent crude oil futures for October delivery traded at $90.00 per barrel at 0930 IST, up from $87.79 per barrel at the end of the Indian gilt market hours Tuesday. The overnight rise pushed the yield higher, dealers said. Meanwhile, US Treasury yields recovered slightly and were at 4.69% at 0930 IST, down from 4.72%, which limited further losses on bond prices, dealers said. Traders will closely track the US CPI inflation data, which could lend cues to the global market and thus impact yields on Indian bonds, too, dealers said.         

 

"Crude has risen since the last trading session, and we are seeing that impact on (bond) prices," a dealer at a primary dealership said. "Well, for the market, recovery in US yields is a secondary factor as of now... crude is primary, which is why we are not seeing some major impact of recovery in US yields."   

 

Traders also await India's retail inflation data, they said. It is seen at 4.4% in July, the same as in June, within the Reserve Bank of India's target band of 2-6%. Traders will also closely track the core inflation number for interest rate cues after RBI Governor Sanjay Malhotra said the central bank's Monetary Policy Committee was tracking underlying price pressures when deciding on rates.

 

The total trade volume in the government securities market at 0930 IST was INR 27.95 billion, lower than INR 46.60 billion at 0930 IST Tuesday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.76–6.82% during the day. (Diksha Tripathy)

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India Gilts: Seen tad down as crude rises; robust tax collection may aid

 

NEW DELHI – Government bond prices are seen opening slightly lower as Brent crude futures for October delivery approached $90 per barrel in Asian trade, dealers said. A sharp rise in tax collections year-on-year may help steady gilt prices as early concerns of a fiscal slippage in 2026-27 (Apr-Mar) eased, they said. 

 

The 10-year benchmark 6.94%, 2036 bond is expected to open at 6.78-6.79% Wednesday and move between 6.76% and 6.82% through the day, dealers said. Tuesday, the bond had ended at INR 101.12 or 6.7791% yield. Gilt prices had fallen sharply during the day as Brent futures touched $90 a barrel before ending off lows as crude oil prices eased from those levels.

 

Brent futures for October delivery were at $89.65 per barrel at 0822 IST, up from $87.79 per barrel at 1700 IST Tuesday when the Indian market shut. Crude oil prices inched up due to continuing uncertainty over a peace deal between the US and Iran, with rhetoric on both sides suggesting a truce in the West Asia war was not imminent, dealers said. A fresh wave of attacks by Yemen on shipping in the Red Sea also pushed up prices of the commodity.

 

Gilt prices have been closely tracking crude oil prices for cues on the domestic inflation trajectory and may continue to do so in early trade, dealers said. Typically, a rise in crude oil prices increases the risk of imported inflation in India, putting pressure on the Reserve Bank of India to tighten monetary policy. However, traders may avoid large bets before the release of India's CPI inflation data for July at 1600 IST.

 

Retail inflation in India is seen at 4.4% in July, the same as in June, above the RBI's 4% medium-term target but within its target band of 2-6%. Traders will also closely track the core inflation number for interest rate cues after RBI Governor Sanjay Malhotra said the central bank's Monetary Policy Committee was tracking underlying price pressures when deciding on rates. The US CPI inflation print is also awaited after Indian market hours, which may keep foreign investors on the sidelines of the Indian bond market Wednesday, dealers said. 

 

Dealers now expect robust direct tax collections could keep the Centre's fiscal deficit at the target of 4.3% of GDP in FY27 and help it avoid additional borrowing, a positive for gilt prices. The government's indirect tax collections are expected to fall sharply from Budget estimates and expenses are seen higher due to measures taken to mitigate the impact of the war in West Asia on the Indian economy. Data released Tuesday showed the government's net direct tax collections rose 23.1% on year between Apr. 1 and Aug. 10. However, some cautioned that the data benefitted from a low base effect – the income tax filing deadline had been pushed to Sept. 15 from Jul. 31 last year while it was not extended this year.  (Aaryan Khanna)

 

End

 

US$1 = INR 95.33

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

 

Edited by Avishek Dutta

 

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