India bonds dip as quarter-end dulls demand, RBI skips old benchmark in OMOs

MUMBAI: Indian government bond prices eased in early trading on Wednesday, the last trading session of 2025, due to quarter-end positioning, while the central bank’s omission of the former benchmark from its open-market purchases weighed on sentiment.

The benchmark 10-year yield was at 6.5849%, as of 10:50 a.m. IST. It settled at 6.5786% on Tuesday.

Bond yields rise when prices fall.

The Reserve Bank of India’s choice to purchase more short-term notes in its OMOs, rather than the former benchmark 10-year notes, has tempered market optimism, they said.

Traders were hoping the RBI would also buy the 6.33% paper maturing in 2035, helping some of the bond holders shed positions.

The RBI is scheduled to buy bonds worth up to 500 billion rupees ($5.57 billion) on Monday, and had announced the papers on Tuesday.

“OMO support hasn’t stopped the selling because the market’s risk appetite is still weak,” a trader at a private bank said.

“Selling may persist until there’s clarity on a US trade deal and Bloomberg index inclusion for FAR (fully accessible route) bonds, which could revive foreign inflows.”

Despite negotiations, New Delhi has been unable to close a deal with the US or the European Union this year, as initially intended. Further bond moves will also hinge on the state January-March debt supply calendar, expected to be announced by the end of this week, with borrowing seen at 5 trillion rupees, a record quarterly issuance.

The one-year OIS rate was at 5.4550%, and the two-year OIS rate stood at 5.5625%.

The five-year OIS rate stayed at 5.9225%.