India 10-year benchmark government bond yield down 1 bp at 6.3535%; previous close 6.3645%

India 10-year benchmark government bond yield down 1 bp at 6.3535%; previous close 6.3645%

India's 10-year government bond yield dropped to 6.3535% on Monday, marking a significant decline from the previous close of 6.3645% [1]. This fall comes as investors anticipate further rate cuts by the Reserve Bank of India (RBI), supported by strong market liquidity and a strengthening rupee. The central bank has already reduced rates twice this year and is expected to continue its accommodative policy stance.

The benchmark 10-year yield (IN067934G=CC) ended at 6.3164%, the lowest since November 9, 2021 [2]. Experts predict further rate cuts, with Ketan Parikh, head of fixed income at ICICI Prudential Life Insurance, expecting a 50 basis points (bps) reduction along with liquidity measures to maintain surplus. The terminal rate is expected to trend lower towards 6.25% [2].

The RBI is set to buy 200 billion rupees ($2.35 billion) worth of bonds on Tuesday, followed by a similar amount next week, adding to its total purchases for April, which will amount to 1 trillion rupees [2]. This move is aimed at injecting liquidity into the market and supporting economic growth.

The overnight index swap rates also plunged, with the one-year rate (INR1YMIBROIS=CC) falling by 4 bps, the two-year rate (INR2YMIBROIS=CC) easing by 4 bps, and the five-year rate (INR5YMIBROIS=CC) declining by 5 bps [2]. The positive moves in the local currency, which climbed 0.3% on Monday, further supported the downside in bond yields [2].

The RBI's accommodative stance is likely to continue, with the central bank chief expressing concerns about dwindling liquidity in the call money market [3]. The minutes of the central bank's April policy meeting, due on Wednesday, will provide further insights into the future rate trajectory [3].

References:
[1] https://www.threads.net/@businessnews100/post/DIttn9PowWa/indias-10-year-government-bond-yield-dropped-to-631-on-monday-the-lowest-since-n
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3QZ0M2:0-india-s-10-year-bond-yield-falls-ahead-of-central-bank-s-debt-purchase/
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3QZ08X:0-india-s-10-year-bond-yield-stays-near-over-3-year-low-ahead-of-rbi-note-purchase/