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Informist, Thursday, Aug. 13, 2026

 

By Diksha Tripathy

 

MUMBAI – Prices of government bonds ended higher Thursday on likely purchases by foreign portfolio investors and foreign banks, dealers said. An intraday fall in prices of Brent crude oil also supported bond prices Thursday, dealers added. The rise in bond prices was capped as state-owned banks booked profits when the yield on the 10-year 6.94%, 2036 bond remained near 6.76%, dealers said.           

 

The 10-year benchmark 6.94%, 2036 bond ended at INR 101.27, higher than INR 101.13 Wednesday. Its yield settled at 6.7582%, down from 6.7776% Wednesday. During the day, the 10-year benchmark bond moved between 6.76% and 6.79%. While likely purchases by foreign portfolio investors and foreign banks pulled the yield on the 10-year 2036 bond towards the day's low, profit-taking by state-owned banks limited a fall below the key 6.75% level, dealers said. 

 

"FPIs were buying across tenures today (Thursday) and that led to a rally in G-sec (government securities market)," a dealer at a state-owned bank said. "In fact, PSUs (State-owned banks) are also selling some of their stock to them (foreign banks)." 

 

The rise in bond prices was capped as traders continued to book profits near 6.76% yield on the 10-year benchmark 6.94%, 2036 bond, dealers said. State-owned banks were likely the largest net sellers in the secondary market Thursday, they said. Pension funds are also likely to have sold bonds to foreign banks and FPIs, which limited the rise in bond prices, dealers said.

 

 

Bond prices were supported by a fall in Brent crude oil prices, dealers said. Brent crude oil futures for October delivery touched the day's low of $86.85 per barrel, which helped bond prices climb to the day's high, dealers said. Near-month Brent crude oil prices were at $87.36 per barrel at the end of the Indian gilt market hours, lower than $88.95 per barrel at 1700 IST Wednesday. 

                   

On Thursday, long-term bonds remained sharply higher as seen this week, with demand for INR 50 billion of the 7.24%, 2055 bond and INR 50 billion of the 7.50%, 2056 green bond at the auction on Friday seen robust. Demand for Separate Trading of Registered Interest and Principal of Securities and bond-forward rate agreements on long-term bonds has risen this week after several insurers, especially private sector insurance companies, missed out on auction stock last week, they said. Banks also purchased long-term bonds, dealers said. 

 

The 7.71%, 2066 bond ended at INR 103.35, 40 paise higher than on Wednesday. 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 FPIs also bought these bonds, which pushed prices higher, some dealers said. 

 

The trading activity in the market remained firm throughout the day, dealers said. The total turnover in the government securities market at 1700 IST was INR 809.15 billion, as against INR 432.50 billion at 1700 IST Wednesday, data from the Clearing Corp. of India Ltd. showed. Trading activity in 10-year was the highest at INR 483.20 billion, followed by the 6.68%, 2040 bond at INR 76.60 billion, and the new 15-year 7.06%, 2041 bond at 47.50 billion, the CCIL data showed. The trade volume picked up in the 15-year 2041 bond as traders have started accumulating the bond, with more interest from foreign banks and FPIs, dealers said. 

    

OUTLOOK

On Friday, 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. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 6.72% and 6.80% Friday, dealers said. Any significant movement in the rupee and swap rates will also lend cues, dealers said. 

 

Bond prices may also take cues from the result of the weekly gilt auction Friday, dealers said. The government will sell INR 320 billion of four gilts, which include a new 2029 bond, a new 2033 bond, 7.24%, 2055 bond, and 7.50%, 2056 green bond. Demand for the new 2029 and new 2033 bonds at the auction on Friday is expected from banks, with state-owned banks seen picking up about half the notified amount, dealers said. The coupon on the 2029 bond is seen at about 6.13% and that on the 2033 bond at about 6.55%, dealers said.

 

Traders speculate the presence of a foreign portfolio investor at the 2029 bond auction, since the FPI has picked up stock at previous 2029 bond auctions recently, they said. Demand from banks deploying foreign currency non-resident (bank) deposits is also seen for short-term bonds, but some asset and liability managers may bid at higher yields, dealers said. 

 

	THURSDAY		WEDNESDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	101.2675	6.7582%	101.1300	6.7776%
6.48%, 2035	98.1650	6.7506%	98.0300	6.7707%
6.36%, 2031	100.0200	6.3547%	99.9700	6.3675%
7.06%, 2041	101.0200	6.9487%	100.7300	6.9801%
7.24%, 2055	98.6100	7.3565%	98.3400	7.3794%

 

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India Gilts: Up more as crude falls; investors pick up long-term bonds

 

	1345 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.26	101.27	101.14	101.20	101.13
YTM (%)	6.7596	6.7586	6.7765	6.7681	6.7776

 

NEW DELHI--1345 IST--Government bond prices hit an intraday high as Brent crude futures for October delivery fell to the day's low under $88 per barrel, dealers said. Robust demand for long-term gilts also pushed up prices of gilts across tenures, including the 10-year benchmark 6.94%, 2036 bond, they said.

 

The fall in the five-year overnight indexed swap rate to 6.25% from 6.28% Wednesday also aided gilt prices. Long-term bonds were sharply up for the second day in a row as insurers were picking up the 7.24%, 2055 bond even before its auction Friday, with some investors also preferring the 40-year benchmark 7.71%, 2066 paper. However, gains were limited as traders booked profit on the 10-year benchmark bond's above INR 100.20, dealers said. 

 

"There is a lot of buying coming in from both traders and investors in the 30- and 40-year bonds. Those bonds have underperformed a lot in the past and insurers who have been on the selling side have returned to the market," a dealer at a foreign bank said. "FCNR (foreign currency non-resident deposit) flows are continuing in the shorter segments, banks are receiving swaps (overnight indexed swap rates)."

 

Demand at the INR-320-billion weekly gilt auction Friday is seen firm with investors' risk appetite also rising due to the comfortable liquidity surplus in the banking system, which was above 1% of banks' net demand and time liabilties since the beginning of August, dealers said. Banks will pick up the new three-year, 2029 gilt for asset-liability management needs, which should help the supply sail through.

 

Foreign banks continued to buy the five-year 6.36%, 2031 bond due to robust FCNR(B) inflows, though some preferred receiving the five-year OIS rate, dealers said. The pace of foreign banks' purchases in the five-year paper have reduced since last week, dealers said.

 

The total trade volume in the government securities market at 1345 IST was INR 465.15 billion, sharply higher than INR 337.70 billion at 1330 IST Wednesday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.74–6.81% for the rest of the day. (Aaryan Khanna)

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India Gilts: Tad up as crude falls overnight; gains limited by profit sales

 

	1000 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	101.18	101.21	101.17	101.20	101.13
YTM (%)	6.7702	6.7663	6.7727	6.7681	6.7776

 

	1000 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.36%, 2031
PRICE (INR)	99.99	100.02	99.99	100.00	99.97
YTM (%)	6.3624	6.3547	6.3624	6.3599	6.3675

 

NEW DELHI--1000 IST--Government bond prices were slightly higher in early trade due to an overnight fall in crude oil prices, though there was no change in the view on domestic interest rates after CPI inflation data in India and the US, dealers said. Gains were limited as oil price rose during Indian market hours.

 

Brent crude futures for October fell slightly to $88.35 per barrel at 0900 IST from around $89 a barrel at the end of Indian market hours Wednesday, but rose past $88.50 per barrel subsequently. Crude oil prices are unlikely to materially impact traders' expectations of imported inflation in the $80-$90 per barrel band, dealers said. However, bond prices were closely tracking crude due to a lack of significant domestic cues Thursday, they are said.

 

"We are reacting to crude. It doesn't look like there is going to be much activity beyond that today," a dealer at a state-owned bank said. "Traders know there is a range and are playing that range on both sides."

 

Traders took profit above INR 101.20 in the 6.94%, 2036 bond as the 10-year benchmark yield is not seen breaking out of its 6.75-6.80% trading range with not enough significant triggers, dealers said. State-owned banks which picked up a large quantum of the gilt near INR 100.00 were trimming their portfolios at a profit, they said. At the same time, bonds maturing in over 15 years were up sharply ahead of modest supply this week and firm demand from both life insurers and traders. 

 

Meanwhile, some traders had expected the five-year benchmark 6.36%, 2031 gilt to outperform peers after India and US CPI data for July suggested rate hikes may not be immediate in either economy. There was a large quantum of fresh purchases in the bond as its yield above 6.35% was seen attractive if the Reserve Bank of India's Monetary Policy Committee keeps the repo rate unchanged in both October and December, dealers said. Foreign banks and private-sector banks were picking up the bond to deploy cash acrrued from foreign currency non-resident (banks) deposits under the RBI's special scheme.

 

Even in the five-year bond, the price action was not significant as traders were not pricing in an October rate hike even before the CPI data and traders avoided taking a large call on the December policy decision so early, dealers said. State-owned banks were selling three-to-five year bonds to other banks while buying bonds maturing up to 15 years, they said.

 

The total trade volume in the government securities market at 1000 IST was INR 99.00 billion, sharply higher than INR 76.35 billion at 1030 IST Wednesday, according to data from Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 6.75–6.81% during the day. (Aaryan Khanna)

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India Gilts: Seen tad up as crude eases; India, US CPI ease rate hike fear

 

NEW DELHI – Government bond prices are seen opening slightly higher as oil prices eased overnight despite continued uncertainty over a truce between the US and Iran. The releases of Indian and US CPI inflation for July did not make a strong case for a rate hike at upcoming central bank meetings, which may boost short-term bonds and overnight indexed swap rates, dealers said.

 

The 10-year benchmark 6.94%, 2036 bond is expected to open at 6.77% Thursday and move between 6.75% and 6.80% through the day, dealers said. Wednesday, the bond had ended at INR 101.13 or 6.7776% yield. Wednesday, prices of most government bonds gave up gains in choppy trade ahead of the release of US CPI data after Indian market hours, though long-term bonds ended sharply higher. 

 

Brent crude for October fell to under $88 per barrel in Asian trade from $88.95 per barrel at the end of the Indian gilt market hours on reports the US and Iran will extend a temporary ceasefire agreement soon. Container traffic in the Strait of Hormuz remains low, putting pressure on oil supply. With near-month Brent futures seen capped around $90 per barrel after hitting that mark on Tuesday and Wednesday, bond dealers may pick up bonds on the view military action will not erupt again in West Asia.

 

Inflation data was also not a cause for alarm and did not suggest the Reserve Bank of India's Monetary Policy Committee would need to hike rates in a hurry to curb price pressures, dealers said. India's CPI inflation for July inched up to 4.45% from 4.38% in June, in line with expectations. Core inflation fell to 3.9% from 4.1%, also as expected. With RBI Governor Sanjay Malhotra saying just before the release that inflation remained more or less in check, traders do not expect a domestic rate hike in October. 

 

Bonds maturing in up to five years may gain Thursday after US CPI data came in line with expectations, with traders also likely to cover short sales of the 10-year benchmark gilt, dealers said. The two-year US Treasury yield has fallen 5 basis points this week to 4.19% at 0830 IST Thursday. Data released after Indian market hours showed that headline annual inflation in the world's largest economy eased to 3.4% in July from 3.5% the previous month. Core CPI inflation was 2.5% in July from 2.6% the previous month.

 

After US inflation data, US traders now see only a 40% probability of a rate hike by the US Federal Reserve at its next meeting in September, down from 54% a week ago, according to the CME FedWatch tool. Rate hikes by the US Federal Open Market Committee in 2026 are seen as one of the only triggers for India's MPC to hike the policy repo rate this calendar year, dealers said.  (Aaryan Khanna)

 

US$1 = INR 95.44

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

 

Edited by Avishek Dutta

 

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