MUMBAI: Indian government bond prices extended their upward trend on Thursday, with the benchmark bond yields hovering near a 38-month low, amid heightened expectations of an aggressive policy easing by the domestic central bank in fiscal 2026.
Market participants are awaiting the government’s borrowing plan for the next six months due later in the day.
The benchmark 10-year bond yield was at 6.5915% as of 10:10 a.m. IST, compared with Wednesday’s close of 6.6022%.
Earlier in the day, the yield, which moves inversely to bond prices, fell to 6.5798%, the lowest since January 14, 2022.
“We have started the session where we had left it yesterday and are inching towards 6.55% on the benchmark bond yield as traders are anticipating the central bank to cut rates as well as infuse more liquidity to lower effective rates,” a trader with a state-run bank said.
Investors are betting on another rate cut at the Reserve Bank of India’s (RBI) policy decision on April 9.
The RBI reduced its key policy rate by 25 basis points for the first time in nearly five years in February.
The overnight indexed swap markets have started pricing in far more aggressive rate cuts than previously anticipated. Investors now expect another 50-75 basis points of cuts from hereon, against an earlier view of an additional 25 bps cut.
Meanwhile, India’s finance ministry and RBI officials met on Wednesday to decide the country’s market borrowing plan for April to September and will likely announce the calendar later in the day.
India bond yields a tad down with focus on government’s borrowing plan
The government plans to borrow 14.82 trillion rupees ($172.63 billion) through the sale of bonds in the financial year starting April 1, after raising 14.01 trillion rupees in fiscal 2025.
Despite an elevated supply through March, bond prices have risen after the central bank infused 6.8 trillion rupees into the banking system this quarter through bond purchases, forex swaps and early-April maturity repos.
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