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Informist, Friday, Sept. 18, 2026

 

By Cassandra Carvalho

 

MUMBAI – Prices of most government bonds ended lower Friday as traders trimmed exposure to risk and US Treasury yields rose intraday, dealers said. The five-year benchmark 6.36%, 2031 bond outperformed bonds of other tenures due to likely purchases by foreign portfolio investors, they said, even as the yield curve is expected to flatten further. 

 

The 10-year benchmark 6.94%, 2036 gilt ended at INR 99.10, down from INR 99.25 Thursday. The bond's yield rose to 7.0686% from 7.0463% at the end of the previous session. The yield on the 10-year 2036 gilt has risen nearly 5 basis points on week. The 6.36%, 2031 bond ended at INR 98.45 or 6.77% yield Friday, rising 15 bps on week. The spread between the two bonds halved to 20 bps from 40 bps on Sept. 11.  

 

"Volumes are low and people are uncertain of what will happen over the weekend," a dealer at a private sector bank said. "If there's a deal (to resolve the) on US-Iran war, crude could go below $90 but there's some selling (in bonds) because it (the war) could escalate further also."

 

Bond prices were largely in a thin band earlier in the session, and fell further towards the end of trade, with crude oil prices inching up and US yields rising, dealers said. Near-month Brent crude oil futures rose to $103.42 per barrel at the end of gilt market hours from a low of $101.92 during the session, but were little changed overnight, leaving traders cautious since oil prices remained above $100 per barrel. "This one dollar fall here and there in crude doesn't make a difference, India's oil basket price is already much higher," a dealer at a mutual fund said. The price of India's crude oil basket was $125.14/barrel on Thursday, much higher than Brent prices.  

 

At the INR-280-billion gilt auction, cut-off prices were largely within expected lines, dealers said. State-owned banks took about INR 50 billion of the 7.06%, 2041 bond, with some banks also buying the bond for trading books. Some dealers found yields of bonds maturing in more than 10 years lucrative for investment books. The yield spread between the 15-year 2041 bond and the 10-year benchmark widened slightly to 16 bps Friday from 12 bps a week ago. Traders preferred to place short bets on short-term bonds since the yield curve is expected to flatten further. Some banks bid for the 7.43%, 2076 gilt along with insurers and pension funds, dealers said. 

 

The total turnover in the government securities market was INR 388.80 billion Friday, down from INR 496.35 billion at the end of Indian gilt market hours Thursday, data from Clearing Corp. of India showed.

 

OUTLOOK

Gilts are not traded Saturdays. On Monday, gilt prices will track the movement of US yields and crude oil prices at open. The yield on the 10-year US Treasury note rose back to 5.00% post market hours after falling to 4.92?rlier in the session. 

 

Traders will also track the result of the INR-250-billion auction the RBI will conduct to sell gilts through open market operations at 0930-1030 IST. This is the second tranche of the INR-1-trillion OMO sales the central bank had announced for September. The cut-off yields at the OMO auction Thursday were higher than expected, and may rise further at the next auction, as the RBI is seen continuing to sell the entire notified amount of gilts as it did Thursday, dealers said. 

 

Traders expect the 10-year benchmark bond yield to trade in a range of 7.00-7.10% until the Reserve Bank of India's Monetary Policy Committee meeting next month, if crude prices stay at current levels, dealers said. Several expect the MPC to hike the repo rate by 25 basis points and announce more measures to drain durable liquidity, including expectations of more OMO sales of INR 250 billion or INR 500 billion. A rate hike of 25 bps is already priced into bonds, making for lacklustre trade, dealers said. Some traders find current yields lucrative to buy bonds since the 10-year bond is unlikely to sustain a rise above its May high of 7.14%, they said. 

 

Traders also await the release of the borrowing calendar for state and central government bond issuances for the next quarter and the second half of the current financial year, respectively. The proportion of different bond tenures in the calendar will provide cues on the shape of the gilt yield curve, dealers said. Most traders expect little change in the Centre's plan compared to that in Apr-Sept, though bankers have put forth to the central bank several preferences. The RBI has held several meetings with market participants this month to discuss the Centre's borrowing calendar, they said. Some expect more supply of seven-year bonds, while some expect more 15-year bond supply, while others expect more supply of three- to five-year bonds. 

 

Any significant movement in the rupee and swap rates will also lend cues, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 7.00% and 7.10%, dealers said.

 

	FRIDAY		THURSDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	99.1000	7.0686%	99.2525	7.0463%
6.48%, 2035	96.3200	7.0363%	96.3200	7.0359%
6.36%, 2031	98.4500	6.7708%	98.4000	6.7837%
7.06%, 2041	98.5050	7.2243%	98.6200	7.2115%
7.24%, 2055	95.8300	7.5975%	95.9300	7.5886%

 

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India Gilts: Down as US yields rise; gilt auction result in line with view

 

	1520 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.14	99.33	99.10	99.10	99.25
YTM (%)	7.0628	7.0351	7.0686	7.0686	7.0463

 

MUMBAI--1520 IST--Government bond prices fell during the day, tracking a rise in US Treasury yields, dealers said. Brent crude oil prices also fell during the day Friday. However, it continued to trade above $100 per barrel, which weighed on bond prices, dealers said. Bond prices did not react much to the result of the weekly gilt auction, as it was largely in line with the traders' view. 

 

The government had invited bids to raise INR 280 billion through the sale of the 7.06%, 2041 bond and the 7.43%, 2076 bond at the auction. The Reserve Bank of India set cut-off prices of INR 98.45 and INR 96.73 on the 2041 and 2076 papers, respectively. This was broadly in line with INR 98.45 and INR 96.81, respectively, as seen in an Informist poll. 

 

The 15-year 2041 paper likely saw firm demand from traders across different market segments, especially from state-owned and foreign banks. Some traders also covered short positions in the 15-year paper, which pushed the cut-off price higher, dealers said. 

 

For the 2076 paper, demand was likely from pension funds and insurance companies, dealers said. The cut-off price for the long-term paper was expected to be lower as most traders see the yields rising going ahead amid higher global interest rates and expectations of a repo rate hike by the RBI.

 

"Participation was robust for the 15-year paper and both the cut-offs (at the auction) are in line with the view," a dealer at a state-owned bank said. "Usual participants, like insurance companies and pension funds, were there."        

 

A rise in US Treasury yields also weighed on bond prices intraday, dealers said. The yield on the 10-year benchmark US Treasury note was at 4.96% at 1520 IST, up from 4.94% at 0900 IST. The yields rose despite a fall in oil prices during the day. Brent crude oil prices fell to $102.68 per barrel at 1520 IST from $103.94 per barrel at 0900 IST. Traders will closely track oil prices and US yields for the rest of the day as these may lend further cues to the market. Some traders also trimmed positions ahead of the weekend, which weighed on bond prices. 

 

The total traded volume in the government securities market at 1520 IST was INR 299.65 billion, lower than INR 351.45 billion at 1530 IST Thursday, according to data from the Clearing Corp. of India Ltd. The yield on the 10-year gilt is seen in a range of 7.00-7.10% during the day, dealers said. (Diksha Tripathy) 

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India Gilts: In thin band before gilt auction result; fall in crude oil helps

 

	1155 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.23	99.33	99.10	99.10	99.25
YTM (%)	7.0504	7.0351	7.0686	7.0686	7.0463

 

MUMBAI--1155 IST--Government bond prices were slightly down amid low trade volume as traders refrained from building aggressive positions ahead of the release of weekly gilt auction results, dealers said. The fall in US Treasury yields and Brent crude oil prices limited losses, dealers said.

 

"Bond prices are down today (Friday) because of a reversal from yesterday (Thursday)... it rose yesterday (Thursday) much...it was not a buying level, but somebody pulled up the prices," a dealer at a primary dealership said. "The market seems volatile to determine the demand for the bonds at auction but underwriting was good."

 

At the INR 280 billion worth of gilt auction where the government will sell INR 170 billion of the 7.06%, 2041 bond and INR 110 billion of the 7.43%, 2076 bond. Demand for the 15-year paper appears mixed. Some traders expect firm demand for the security from banks and likely foreign investors. Others said demand is likely to remain subdued as yields are expected to rise going ahead amid higher global interest rates and expectations of a repo rate hike by the Reserve Bank of India, dealers said. Some traders also pointed to better-than-expected underwriting, which signalled strong demand for the bonds at the auction, dealers said. Part of the demand is also likely to be driven by short-covering in the 15-year paper, dealers said. 

 

A proxy for tracking short sales on a particular bond is the number of trades on the paper in the special repo segment of the Clearcorp Repo Order Matching System. The data at 1109 IST showed trades worth INR 72.26 billion in the 7.06%, 2041 gilt, up from INR 62.46 billion Thursday. The 50-year 7.43%, 2076 paper, on the other hand, is likely to be picked up by the insurance companies and pension funds and hence is likely to see firm demand, dealers said.

 

Brent crude oil futures for November delivery were at $103.46 per barrel, lower than the psychologically crucial $105 per barrel level and similar to $103.44 per barrel at the end of Indian trading hours Thursday. The fall in Brent crude oil prices due to a lack of escalation in the West Asia lifted traders' sentiments, dealers said. The yield on the 10-year benchmark US Treasury yield was at 4.94%, lower than 4.98% from the end of Indian trading hours Thursday, which also helped bond prices, dealers said. 

 

The total traded volume in the government securities market at 1155 IST was INR 136.35 billion, higher than INR 129.45 billion at 1130 IST Thursday, according to data from the Clearing Corp. of India Ltd. The yield on the 10-year gilt was seen in a range of 7.00-7.10% during the day, dealers said. 

 

Traders expect the auction result to lend further cues to the market, they said. Later in the day, traders are likely to place short bets ahead of the weekend which will likely weigh on bond prices, dealers said.  (Janwee Prajapati)

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India Gilts: Steady ahead of INR-280-bln gilt auction; lower US yields help

 

	0930 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.23	99.33	99.10	99.10	99.25
YTM (%)	7.0497	7.0351	7.0686	7.0686	7.0463

 

MUMBAI--0930 IST--Government bond prices were steady as traders refrained from placing aggressive bets ahead of the weekly gilt auction Friday, dealers said. However, an overnight fall in US Treasury yields supported bond prices, dealers said. Brent crude oil prices traded above $100 per barrel, which weighed on bond prices, dealers added.       

 

The total traded volume in the government securities market was subdued till 0930 IST as traders avoided taking fresh positions before the auction. The total traded volume in the government securities market at 0930 IST was INR 25.35 billion, lower than INR 28.85 billion at 0930 IST Thursday, according to data from the Clearing Corp. of India Ltd. Traders expect the auction result to lend further cues to the market, they said. 

 

The government will sell INR 170 billion of the 7.06%, 2041 bond and INR 110 billion of the 7.43%, 2076 bond at the auction from 1030 IST to 1130 IST Friday. Traders expect the auction to sail through. However, the war in West Asia, which has pushed yields higher in the secondary market, may dampen demand for the papers at the auction. 

 

"The opening was lower, but that was one wrong trade, I guess," a dealer at a state-owned bank said. "People are waiting for the auction cut-offs. Auction cut-offs will lend direction to the market later in the day because other factors are mixed...like US yields are down and crude is still trading above $100 (per barrel)."

 

Friday, a fall in US Treasury yields helped bond prices, dealers said. The yield on the 10-year benchmark US Treasury note was at 4.94% at 0930 IST, down from 4.98% at the end of Indian gilt market hours Thursday. Meanwhile, Brent crude oil prices traded at $104 per barrel, slightly higher than $103.29 per barrel at 1700 IST Thursday. Traders will closely track any developments in the war which could impact crude oil prices and in turn bond prices. The yield on the 10-year gilt is seen in a range of 7.00-7.10% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen up as Brent slips below $105/bbl, US yields fall

 

MUMBAI – Government bond prices are likely to open slightly higher Friday, tracking an overnight fall in US Treasury yields, dealers said. Brent crude oil prices traded below the crucial level of $105 per barrel, which is likely to support bond prices, dealers said. Traders will closely track result of the weekly gilt auction Friday, which could lend cues to the market in the second half of the trading session. 

 

The yield on the 10-year benchmark 6.94%, 2036 bond is expected to open around 7.02% Friday and move between 7.00% and 7.10% during the day, dealers said. Bond prices will closely track the movement in Brent crude oil prices and US yields throughout the day, dealers said. In early trade, Brent crude oil prices fell as concerns over supply eased and traders turned their attention to the next round of diplomatic efforts that could influence the course of the US-Iran war. The hopes of alternative routes for West Asian oil supplies outweighed concern over strikes involving Saudi Arabia and Yemen's Iran-aligned Houthis. Traders will closely track any developments in the war in West Asia as it could impact bond prices during the day. 

 

A fall in US yields is likely to support Indian bond prices Friday, dealers said. The US yields fell overnight due to a decline in oil prices to below $105 per barrel. The yield on the 10-year benchmark US Treasury note fell to 4.94% at 0815 IST from 4.98% at 1700 IST Thursday. Elevated US yields had pushed Indian gilts out of favour with foreign investors and strengthened the case for a domestic repo rate hike as soon as October, dealers said. Market participants are still expecting a 25-baiss point rate hike by the Reserve Bank of India's Monetary Policy Committee in October meeting. 

 

On Friday, some traders are likely to refrain from placing aggressive bets ahead of the weekly gilt auction on Friday, they said. The government will sell INR 170 billion of the 7.06%, 2041 bond and INR 110 billion of the 7.43%, 2076 bond at the auction from 1030 IST to 1130 IST on Friday. Traders expect the auction to sail through; however, higher yields in the secondary market may dampen demand for the papers at the auction, in turn impacting cut-off prices. Some traders are likely to cover short positions at the auction, which could support higher cut-off prices for the papers, dealers said. The auction result is likely to lend direction to the market later in the day on Friday, they said.

 

Traders also await the release of the borrowing calendar for state and central government bond issuances for the next quarter and the second half of the current financial year, respectively. The proportion of different bond tenures in the calendar will provide cues on the shape of the gilt yield curve, dealers said.  (Diksha Tripathy)

 

End

 

US$1 = INR 95.8725

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

 

Edited by Avishek Dutta

 

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