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Informist, Tuesday, Sept. 22, 2026

 

By Cassandra Carvalho

 

MUMBAI – Government bond prices ended sharply higher Tuesday, tracking a more than 2% intraday fall in near-month Brent crude oil futures. However, gains were capped by profit-taking at the key 7.00% yield on the 10-year benchmark bond, the lowest in eight sessions. Bond prices were down earlier in the session and tracked movements in Brent and US Treasury yields during the day. Bond prices later rose across tenures, with demand from asset and liability managers and some foreign portfolio investors in short-term papers, while insurers and some banks picked up long-term papers, dealers said.  

 

The 10-year benchmark 6.94%, 2036 gilt ended at INR 99.50, up for the second consecutive session from INR 99.23 Monday. The bond's yield fell to 7.0106% but off the day's low of 7.0033% from 7.0497% at the end of the previous session.

 

"I think it (10-year benchmark yield) will hold at 7.00%. It will not go below this," a dealer at a state-owned bank said. "A four-bps fall is enough; we have a 10-year (bond) auction also this week."

 

Brent crude oil futures for delivery in November fell to $98.50 per barrel at the end of gilt market hours, from $101.38 per barrel at 0900 IST, on a report that Iran has offered to reopen the vital Strait of Hormuz in seven days. Brent fell further near the end of gilt market hours to $97.43 per barrel on a Reuters report that Saudi Arabia has recommenced operations through its East-West oil pipeline. 

 

While traders' positioning was light overall, some bought bonds maturing in 15 years and above, expecting the Centre to reduce the supply of bonds maturing between 20 and 50 years to less than the current 25% in the tenure bucket for its Oct-Mar borrowing plan. Some traders expect the proportion of long-term bonds to be unchanged. The borrowing plan announcement is expected this week. Traders expect the Centre's gross borrowing in Oct-Mar at about INR 7.9 trillion, based on the Centre's Budget estimate for gross borrowing for the entire year, given that it is on track to borrow INR 8.14 trillion in Apr-Sept, against its target of INR 8.20 trillion. Traders also assessed the outcome of meetings the central bank held this week with market participants, ahead of the Monetary Policy Committee meeting next month. Some traders believe the MPC need not hike the repo rate, as supply-side shocks from crude oil prices are likely to resolve and systemic liquidity has normalised from its record high. Most traders expect the MPC to hike the repo rate by 25 basis points next month. 

 

Traders also assessed the impact of the central bank's latest circular released Monday on market risk, with some viewing the move as a measure to boost available capital.

 

The impact of the cut-off prices at the RBI's open market operation auction to sell gilts Monday lingered in the secondary market Tuesday. Cut-off prices were above several traders' expectations, even though they were in line with an Informist Poll median. "So many who did not want to participate at OMO saw the cut-offs at last week's auction and participated yesterday (Monday), so there is that left-over demand in the secondary market," a dealer at another state-owned bank said. This was reflected in strong buying in the 6.36%, 2031 bond and other short-term bonds, dealers said, continuing from Monday. This was also reflected in firm demand for short-term state bonds at auction Tuesday, dealers said. Foreign and private-sector banks' asset and liability managers are active in both the primary and secondary gilt markets, dealers said, as they deploy inflows from foreign currency non-resident (bank) deposits. 

 

Total turnover in the government securities market was INR 602.95 billion Tuesday, sharply up from INR 305.05 billion on Monday, data from Clearing Corp. of India showed. Foreign portfolio investors net purchased gilts worth INR 2.15 billion through the Fully Accessible Route Tuesday, as per the latest data from CCIL.

 

OUTLOOK

On Wednesday, gilt prices will track movements in US yields and crude oil prices at open. Traders do not expect the 10-year benchmark bond yield to fall below 7.00% until the Reserve Bank of India's Monetary Policy Committee meeting next month, while it is not seen rising above 7.10% as a 25 bps rate hike is priced in. Crude prices recovered the day's fall post-market hours, which is likely to weigh on bond prices Wednesday. Many traders expect the MPC to hike the repo rate by 25 basis points and announce more measures to drain durable liquidity, including more OMO sales of INR 250 billion or INR 500 billion. Some traders find current yields attractive for buying 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. 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 others expect more 15-year bond supply, and still 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 expected to move between 7.00% and 7.10%, dealers said.

 

	TUESDAY		MONDAY
	PRICE	YIELD	PRICE	YIELD
6.94%, 2036	99.5000	7.0106%	99.2300	7.0497%
6.48%, 2035	96.5875	6.9953%	96.3500	7.0319%
6.36%, 2031	98.7475	6.6912%	98.6000	6.7307%
7.06%, 2041	98.9700	7.1724%	98.7175	7.2006%
7.24%, 2055	96.3000	7.5558%	96.0900	7.5744%

 

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India Gilts: Reverse losses as oil falls on report of offer to reopen Hormuz

 

--Dealers: Gilts rise on oil price fall, report of Iran offer to open Hormuz 

 

	1458 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.35	99.42	99.14	99.22	99.23
YTM (%)	7.0323	7.0222	7.0629	7.0512	7.0497

 

MUMBAI--1458 IST--Government bonds reversed all losses, tracking a fall in Brent crude oil prices and US Treasury yields after Japan's Kyodo News, citing a senior Iranian government official, said Iran has offered to reopen the Strait of Hormuz, dealers said. Bond prices did not react much to the result of the auction of state government securities, dealers added.

 

Brent crude oil prices tumbled as supply concerns eased following the report of the likelihood of reopening of the key waterway route, dealers said. The report said Tehran's move comes as it ramps up efforts to revive negotiations with Washington. US President Donald Trump has said he would "probably" be open to meeting Iranian President Masoud Pezeshkian at the UN General Assembly in New York this week, according to a Bloomberg report. Traders will closely track the meeting as it is likely to lend further direction to crude oil prices and global bond prices as well, they said. 

 

"Bond prices are falling because of the news on crude that Iran has offered to reopen Hormuz," a dealer at a state-owned bank said. "Now, with this, supply side concerns ease a bit, so crude is also falling." 

 

Following the news break, Brent crude oil futures for November delivery fell to the day's low and were at $98.90 per barrel at 1458 IST, over 2% lower than at 1700 IST Monday. US yields also fell, tracking the fall in oil prices, dealers said. The yield on the 10-year US benchmark fell to 4.93% during the day and was at 4.94% at 1458 IST, down from 4.95% at the end of Indian gilt market hours Monday. 

 

Bond prices remained largely unaffected by the result of the state bond auction, dealers said. A total of seven states had invited bids to raise INR 167.50 billion through the sale of bonds Tuesday. The Reserve Bank of India set a cut-off yield of 7.7244% on Gujarat's 7.47%, 2036 bond at the auction, slightly lower than an Informist poll estimate of 7.74%. Demand at the auction was firm as banks and pension funds bid aggressively for the papers, dealers said. Banks likely picked up the shorter-tenure paper for asset-liability management, while pension funds added long-term securities to their investment books, dealers said.

  

The total turnover in the government securities market at 1458 IST was INR 380.55 billion, sharply higher than INR 164.90 billion at 1530 IST Monday, data from Clearing Corp. of India Ltd. showed. The yield on the 10-year gilt is seen in a range of 7.00-7.07% during the day, dealers said. Traders will track any official announcement on reopening of the Strait of Hormuz, which has been shut due to the ongoing war in West Asia between the US and Iran.  (Diksha Tripathy)

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India Gilts: Remain dn on intraday rise in Brent; caution before MPC in Oct

 

	1224 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.17	99.26	99.14	99.22	99.23
YTM (%)	7.0592	7.0458	7.0629	7.0512	7.0497

 

MUMBAI--1224 IST--Government bond prices were down following the intraday rise in Brent crude oil prices, dealers said. Trade volumes were subdued, as has been the case for almost a week, since traders refrained from building aggressive positions ahead of the Reserve Bank of India's Monetary Policy Committee meeting decision in October, dealers said. Some traders are likely to make some space in their portfolio for the fresh supply of the 10-year benchmark 6.94%, 2036 bond at its auction Friday, which will likely weigh on bond prices, dealers said. 

 

Brent crude oil futures for November delivery rose to $102.09 per barrel from the day's low of $100.22 and $101.21 at 0900 IST, which weighed on bond prices, dealers said. "The crude candle (prices) was lower than $100 per barrel yesterday (Monday) and now its is trading above $102 per barrel," a dealer at a state-owned bank said. "Market (participants) have no clue what is happening in crude...volume is also low because people are cautious before MPC."  

 

The rise in 10-year benchmark US Treasury yields also weighed on bond prices as it rose to 4.98%, up from 4.96% at the end of Indian trading hours Monday, dealers said. India's 10-year benchmark 6.94%, 2036 bond hovered near 7.06% as it moved between the 7.05-7.07% range. Traders do not expect the yield on the 10-year bond to rise above 7.10?fore the RBI's MPC in October, dealers said. Traders are divided over whether the RBI's rate-setting panel will raise the repo rate in its October meeting, with some expecting the central bank to hike the rate by 25 basis points on Oct. 7 while others expect it to hold it steady with a hawkish tone and wait for more economic data, dealers said. 

 

The total turnover in the government securities market at 1224 IST was INR 151.35 billion, up from INR 91.25 billion at 1230 IST Monday, data from Clearing Corp. of India Ltd. showed. The yield on the 10-year gilt is seen in a range of 7.03-7.10% during the day, dealers said.

  

On the auction front, traders expect the demand at the weekly state bond auction to be firm as the supply is lower than the size indicated in the Jul-Sept borrowing calendar, dealers said. Some traders likely bought state bonds at the auction as they considered the yields attractive, dealers said. Some of the state-owned banks did not bid for the bonds aggressively, they said. The cut-off yield on Gujarat's 10-year, 7.47%, 2036 bond re-issue at auction Tuesday is seen at 7.74%, according to the median of an Informist Poll. Traders will await for the auction result for further cues, dealers said.  (Janwee Prajapati)

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India Gilts: Steady ahead of state bond auction, results to lend cues

 

	0930 IST	PRICE HIGH	PRICE LOW	OPEN	PREVIOUS
6.94%, 2036
PRICE (INR)	99.23	99.26	99.20	99.22	99.23
YTM (%)	7.0505	7.0458	7.0545	7.0512	7.0497

 

MUMBAI--0930 IST--Government bond prices were steady due to lack of significant cues ahead of the auction of state government securities Tuesday, dealers said. Brent crude oil prices near $101 per barrel and lower US Treasury yields also supported bond prices, dealers said. 

 

Traders refrained from placing aggressive bets or taking fresh positions ahead of the state bond auction which weighed on the volume. The total turnover in the government securities market at 0930 IST was INR 12.90 billion, up from INR 8.50 billion at 0930 IST Monday, data from Clearing Corp. of India Ltd. showed. A total of seven states will raise INR 167.50 billion through the sale of bonds Tuesday. Traders will closely track the result of the auction, as the cut-off yields are likely to lend cues to the market later in the day.

 

Bond prices were steady as Brent crude oil prices were at levels similar to that of Monday, after falling in early trade. Brent crude oil futures for November delivery were at $101.29 per barrel, largely unchanged from $101.15 per barrel at the end of Indian gilt market hours Monday. Similarly, the yield on the 10-year benchmark US Treasury note was 4.95%, unchanged from 1700 IST Monday.

 

"The market is not that active today (Tuesday) for now because there are no significant cues," a dealer at a state-owned bank said. "If oil prices and UST (US Treasury yields) move, we might see some action." 

 

Traders will closely track developments in the war in West Asia which could impact crude oil prices and in turn bond prices. The yield on the 10-year gilt is seen in a range of 7.03-7.10% during the day, dealers said.  (Diksha Tripathy)

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India Gilts: Seen up as oil hits 11-day low; state bond auction to lend cues

 

MUMBAI – Government bond prices are seen opening higher Tuesday after Brent crude oil prices fell overnight to hit an 11-day low, dealers said. A fall in US Treasury yields is also likely to support bond prices Tuesday, dealers said. Market sentiment is expected to remain positive Tuesday after the Reserve Bank of India after market hours Monday disclosed robust inflows from its special measures to boost foreign exchange reserves, dealers said.

 

The yield on the 10-year benchmark 6.94%, 2036 bond is expected to open around 7.02% Tuesday and move between 6.98% and 7.07% during the day, dealers said. Monday, the bond ended at INR 99.23, or 7.0497% yield. The volume in the first half is expected to remain low, with traders likely to refrain from taking fresh positions ahead of the auction of state government securities Tuesday.

 

A total of seven states will raise INR 167.50 billion through the sale of bonds Tuesday. Traders will closely track the result of the auction, as the cut-off yields are likely to lend cues to the market later in the day. The auction is likely to sail through smoothly due to its small quantum, dealers said. The states were expected to raise INR 237 billion through the auction this week as per the indicative calendar for state borrowing for Jul-Sept.

 

The Indian government securities market may see some optimism amid an overnight fall in Brent crude oil prices and US yields, dealers said. Brent crude oil prices for November delivery fell to an 11-day low of $100.22 per barrel overnight and were trading at $100.90 per barrel at 0800 IST. Oil prices fell on easing supply concerns in West Asia and signs of progress toward ending the US-Iran conflict. US President Donald Trump said he would "probably" be open to meeting Iranian President Masoud Pezeshkian at the UN General Assembly in New York this week, according to a Bloomberg report. The yield on the 10-year benchmark US Treasury note also fell to 4.95% at 0800 IST, similar to its level at 1700 IST Monday. 

 

The RBI's disclosure of robust inflows is likely to add to the optimism Tuesday, dealers said. The RBI's measures to boost foreign capital inflows have attracted $143.60 billion from Jun. 8 till Friday, the central bank said Monday, based on data from authorised dealer banks. Inflows were from foreign currency non-resident (bank) deposits, overseas foreign currency borrowings by banks, and external commercial borrowings by public sector undertakings. Nearly 93% of the inflows came from FCNR(B) deposits at $132.98 billion, which closed on Aug. 31.

 

Banks raised $5.32 billion through overseas foreign currency borrowings during the period, the RBI said. External commercial borrowings by public-sector undertakings were $5.30 billion, according to the data. Traders will closely assess the impact of these inflows on the market.

 

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 with those in Apr-Sept, though bankers have put forth several preferences to the central bank. 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 others expect more 15-year bond supply, and still others expect more supply of three- to five-year bonds.  (Diksha Tripathy)

 

End

 

US$1 = INR 95.59

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

 

Edited by Saji George Titus

 

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