MUMBAI: Indian government bonds ended lower after swinging between gains and losses on Wednesday, amid rising calls for a rate cut next week even as investors stayed cautious before the fiscal second-half borrowing calendar.
The yield on the 10-year benchmark note ended at 6.4908% after closing at 6.4729% on Tuesday. Bond yields move inversely to prices.
The Reserve Bank of India’s monetary policy decision is due on October 1. Capital Economics and Barclays expect a rate cut at the meeting.
“We expect average FY26 retail inflation of 2.4%, creating room for further easing. Financial conditions have tightened since August, impeding transmission,” Barclays said in a note.
India’s largest lender State Bank of India has also called for a rate cut.
The borrowing calendar for the second half, expected to be released in the next few days, will also be a key trigger for the bond market as investors remain concerned that longer-term debt supply may exceed demand.
Traders also await states’ quarterly borrowing calendar, slated for release at the end of the month.
New Delhi will sell 15- and 40-year bonds worth 160 billion rupees ($1.80 billion) each on Friday in the last debt auction for the fiscal first half.
Rates
India’s overnight index swaps ended largely unchanged, with the shorter end of the swap curve seeing heavy volumes.
The one-year OIS rate ended at 5.46%, while the two-year OIS rate settled at 5.4450%.
The liquid five-year OIS rate finished at 5.73%.
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