Indian government bond yields decreased in early trading on the last day of the quarter and the first half of the fiscal year, as investors awaited the central bank’s monetary policy announcement scheduled for the following day. The yield on the 10-year benchmark note was recorded at 6.5483 percent as of 10:00 a.m. IST on Tuesday, down from 6.5547 percent in the previous session.
“There shouldn’t be any selling pressure today, and bond prices are expected to remain stable, with the benchmark closing likely around 6.53 percent to 6.54 percent,” said a trader at a state-run bank.
A majority of participants in a Reuters poll anticipate that the Reserve Bank of India (RBI) will maintain its key interest rate during Wednesday’s meeting. However, financial institutions like Citi, State Bank of India, Capital Economics, and Barclays have not entirely ruled out the possibility of a surprise rate cut.
Madhavi Arora, chief economist at Emkay Global Financial, noted, “We believe there are sufficient reasons for the RBI to deviate from its recent guidance, implementing a further 25 basis points easing in October, and adopting a more open-ended policy approach for potential future easing.”
Additionally, India plans to auction a new 10-year government bond on Friday to raise 320 billion rupees (approximately $3.61 billion), which will replace the existing benchmark paper in the coming days. This announcement follows New Delhi’s decision to increase the allocation of the 10-year bond in its borrowing framework from October to March to over 28 percent while decreasing the issuance of ultra-long 30-50-year notes.
The government aims to raise 6.77 trillion rupees from October to March, following debt sales totaling 7.95 trillion rupees from April to September.
In related developments, India’s overnight index swaps (OIS) rates declined amid receiving interest on the last trading day of the quarter. The one-year OIS rate stood at 5.4550 percent, while the two-year OIS rate was at 5.45 percent. The liquid five-year OIS rate fell to 5.73 percent. (Exchange rate: $1 = 88.7100 Indian rupees)
Published on September 30, 2025.
