The yield on India’s 10-year G-Sec declined to around 6.76%, extending its slide to a fourteen-week low. Strong foreign portfolio inflows and relatively stable crude oil prices underpinned demand for sovereign debt, even as geopolitical tensions in the Middle East resurfaced. Iran launched strikes on US military bases in Kuwait and Bahrain; however, Brent crude traded near $71.9 per barrel after both sides agreed to suspend hostilities and return to peace talks.
Yields were further pressured by an improved macroeconomic outlook. Goldman Sachs raised its 2026 India GDP growth forecast by 30 basis points to 6.8%, while trimming its projections for headline inflation and the current account deficit by 20 basis points each, to 4.4% and 1.1% of GDP, respectively.
At the same time, foreign investors have been significant buyers of Indian government securities, with net purchases reaching INR 279 billion so far in June. This buying has been supported by the Reserve Bank of India’s June 5 measures to encourage capital inflows, as well as rising expectations that India will eventually be included in Bloomberg’s Global Aggregate Index.
