MUMBAI: Indian government bonds settled little changed at the end of a lacklustre session on Wednesday, as market participants awaited future guidance from the central bank’s policy decision due later this week.
The yield on the benchmark 10-year bond ended at 6.2065%, compared with the previous close of 6.2022%. The five-year 6.75% 2029 bond yield ended at 5.8514% against 5.8440%.
Bond yields move inversely to prices.
The Reserve Bank of India’s policy decision is due on Friday, where it is widely expected to cut interest rates by 25 basis points for a third consecutive time.
The central bank has lowered policy rates by 50 basis points in 2025 and has infused $100 billion into the banking system in the December-to-May period.
While most expect a 25 bps cut, the State Bank of India said the RBI should slash rates by 50 bps to jumpstart the credit cycle.
“With a normal monsoon likely and inflation expected to remain moderate for the next year, barring the usual volatility caused due to vegetables, we expect the central bank to cut rates by another 50-75 basis points going ahead with the next policy also being live with probability of a 25 bps cut,” STCI Primary Dealers said in a note.
Indian bonds flat ahead of state debt supply, RBI policy decision
Meanwhile, foreign investors continued to offload bonds, with net sale of 270 billion rupees ($3.1 billion) from bonds that are included in global indexes, since April 1.
David Hauner, head of global emerging markets fixed income strategy at BofA Securities expects Indian bonds to be among the top assets in Asia that will attract inflows once tariff-related uncertainties ease.
Rates
Overnight index swap (OIS) rates stayed rangebound, with shallow volumes through Wednesday, with some rise in activity in swaps maturing within six months.
The one-year OIS rate ended at 5.54%, the two-year OIS rate ended at 5.43%, while the most liquid five-year OIS was marginally lower at 5.64%.
