Indian government bond traders are set to extend recent gains in early deals on Tuesday, as an
improving monsoonadds to positive underlying sentiment boosted
by foreign investor inflows.
The benchmark 6.94% 2036 bond yield is
expected to trade between 6.65% and 6.70%, a trader at a private
bank said, after ending at 6.6851% on Monday, which was its
lowest since March 13. Bond yields move inversely to prices.
The 10-year bond yield eased almost 3 basis points on Monday
and has declined by an aggregate of 37 bps over the past six
weeks.
“Foreign inflows are continuing without any signs of
reversal or getting stopped, and monsoon which was the other
major worry is also improving, so overall market is driven by
the bulls for now,” the trader said.
Relentless foreign purchases are expected to continue
supporting sentiment, with overseas investors buying more than
351 billion rupees ($3.7 billion) in the last one month, since
the central bank’s monetary policy decision.
Inflows under the Fully Accessible Route have remained
strong after New Delhi and the Reserve Bank of India announced
measures to attract foreign capital and support the rupee,
boosting the prospects of domestic bonds being included in
Bloomberg’s Global Aggregate Index.
Monsoon concerns eased after the cumulative rainfall deficit
narrowed to 24% below the long-period average as on July 5,
compared with a 43.1% deficit as of June 28, Barclays said in a
note.
The rally may however hit a minor speed bump in the form of
fresh debt supply from states that are set to raise 213.50
billion rupees ($2.24 billion) through sale of bonds later in
the day.
RATES
India’s overnight index swap rates are likely to consolidate
after another round of declines on Monday.
The one-year swap rate ended at 5.73%,
while the two-year fell 3 bps to 5.8750%. The
five-year rate settled lower at 6.1325%.
Published on July 7, 2026
