India 10Y Yield Sideways Ahead of Record State Bond Sale

2026-01-05 08:04 By Joshua Ferrer 1 min. read

The yield on India’s 10-year G-Sec held around 6.6%, trading in a tight range as investors awaited this week’s state bond auctions.

Indian states are set to borrow INR 268 billion, below the previously scheduled 362 billion, as part of a record INR 8 trillion total issuance plan for January-March.

Traders have been offloading bonds over the past few weeks, uncertain whether the market can absorb the surge in supply.

Liquidity has also tightened, with the banking system’s daily surplus averaging 614 billion rupees as of January 2, down from 1.78 trillion in November.

Foreign investors remain cautious after selling a net 123 billion rupees of index-linked bonds in December, while the rupee weakness adds to outflow concerns.

To support the market, the RBI bought INR 500 billion of bonds and plans an additional INR 1 trillion in purchases this month, alongside a USD 10 billion FX swap scheduled for next Tuesday.

However, lenders are expected to offer bonds at higher-than-prevailing yields.



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