Mumbai Indian government bonds fell
on the first trading day of 2026, bogged down by supply concerns
ahead of Friday’s debt sale and expectations of a sizable state
borrowing calendar for the January–March quarter.
The benchmark 10-year yield was at 6.6146% as
of 10:20 a.m. IST. It ended at 6.5881% on Wednesday.
Bond yields rise when prices fall.
Traders are bracing for Friday’s 320-billion-rupee ($3.56
billion) auction of the benchmark 10-year bond, wary that fresh
supply could swamp a market with thin demand.
States are expected to announce their January–March
borrowing calendar by the end of this week too, with borrowing
seen at up to 5 trillion rupees, a record quarterly amount.
“Supply of state development loans (SDLs) is a concern and
that’s why market is not aggressively bidding today,” said Alok
Singh, head of treasury at CSB Bank.
Indian bonds enter 2026 with a question mark over how much
appetite there is for large debt supply, even after a year in
which the central bank levelled the field with record debt
purchases, liquidity infusion and 125 basis points of rate cuts,
amounting to the steepest reduction in interest rates since
2019.
The U.S. debt market is shut for New Year.