The yield on India’s 10-year G-Sec declined to about 6.67%, its lowest level in three weeks, following the government’s latest debt switch operation. Authorities bought back INR 755 billion of bonds maturing in FY27 and issued INR 694 billion of 2040-dated securities, thereby easing near-term redemption pressures and lowering gross borrowing requirements.
January CPI inflation printed at 2.75%, within the RBI’s 2%–6% tolerance band but above consensus expectations, which helped contain upward pressure on yields. Supportive system liquidity and modest declines in short- and medium-tenor OIS rates also contributed to price stability in the bond market.
However, the decline in yields was partly offset by profit-taking after a four-day rally and by investor caution ahead of the weekly government securities auction. Looking ahead, market participants remain focused on upcoming auctions and broader macro-financial developments for cues on the near-term trajectory of bond yields.
