The benchmark 10-year bond yield of 6.48% in 2035 stood at 6.6661% at 10am IST, up from the day’s low of 6.6443%. On Friday it ended at 6.6635%. Indian financial markets were closed on Monday for Republic Day.
Bond yields move in the opposite direction to prices.
The Reserve Bank of India said after trading hours on Friday it will inject more than $23 billion in liquidity into the banking system, prompting bets that support could extend into March.
Still, traders have scaled back their purchases amid concerns the market could struggle to absorb a sizeable government bond issuance.
Indian states will issue 398 billion rupees worth of bonds later in the day. While that figure is lower than the originally planned 473 billion rupees, it is higher than what traders expected.
States have announced a record borrowing of Rs 5 trillion for the January-March period.
“The RBI cash infusions were expected and are only a temporary solution to the demand-supply mismatch,” said a trader at private banks.
“Much now depends on what the budget signals about the size of the debt supply, which will determine the trajectory of the government’s borrowing costs.”
India’s federal budget is due on February 1 and analysts expect the government to announce record gross borrowings ranging from 16 to 17.5 trillion rupees for the next fiscal.
Rates
Indian index swap yields fell in early trade, reflecting lower US interest rates.
The one-year OIS was 5.56%, down 3.5 basis points, while the two-year rate fell 1.75 basis points to 5.71%. The five-year OIS interest rate fell by 1.75 basis points to 6.12%.
Published on January 27, 2026
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