Rising oil prices limit India bond rally as traders book profits
The benchmark 6.94 per cent 2036 bond yield eased to 7.1710 per cent despite a rebound in Brent crude prices.
Indian government bonds rose for a fourth consecutive session on Thursday, supported by a US Treasury rally and an early drop in crude prices, according to The Economic Times.
The benchmark 6.94 per cent 2036 bond yield fell nearly 2 basis points to 7.1710 per cent. This extended a four-session decline of approximately 24 basis points, though the yield reversed from an intraday low of 7.0669 per cent as traders locked in profits.
Brent crude prices fell to $93.40 a barrel during Asian trade before rebounding by about $3 to $96. Investors are assessing the outlook for the US-Israeli war with Iran following midterm election losses for President Donald Trump's Republican Party.
Kruti Chheta, fund manager at Mirae Asset Mutual Fund, said markets are celebrating cautiously. She stated that a further rally would be seen if there is a definite plan of negotiation between the US and Iran.
Overnight indexed swap (OIS) rates fell on Thursday, indicating markets are reducing expectations for further rate hikes. The one-year OIS rate ended 10 basis points lower at 6.4050 per cent, while the two-year and five-year rates also declined.
Market attention now turns to India's inflation data next week. ICRA expects headline CPI inflation to accelerate to 6.1 per cent in October 2026 from 5.5 per cent in September, breaching the Reserve Bank of India's upper tolerance limit.