India bonds hemmed in as market digests higher rates
Benchmarks Nifty22,622.70-99.25FEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return8.71 % Invest NowFEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return19.29 % Invest NowEnter search…
The Reserve Bank of India has increased its key policy rate by 25 basis points, raising it to 5.50%. This adjustment signifies a strategic step towards cautious monetary tightening shaped by global economic developments. Traders are exercising caution due to heightened global yields and soaring crude oil prices impacting the bond market.
Listen to this article in summarized format
Loading...×Indian government bonds traded in a narrow range early Thursday as traders digested the Reserve Bank of India's first rate hike in nearly four years along with a shift to a "calibrated tightening" stance, signalling further policy action ahead.Elevated global yields and crude oil prices also kept sentiment guarded.
The benchmark 6.94% 2036 bond yield was flat at 7.2404% as of 11:00 a.m. IST. Bond yields rise when prices fall.
Bonds Corner Powered By India bonds sink deeper on RBI commentary, inflation concerns
Indian government bonds are currently facing notable losses, pushing the 10-year yield to its highest since March 2023. This downturn comes in the wake of hawkish remarks from Reserve Bank of India Governor Sanjay Malhotra about financial stability. Additionally, India's wholesale inflation saw an unexpected rise in September, leading to growing concerns over potential future monetary policy shifts.
Indian bonds slip on higher oil, hawkish RBI governor commentsIndia's benchmark bond breaks 4-day falling streak as value investors returnIndia bonds rise as investors see value after 10-year yield nears 7.40%Bond yields rise to 3-year high on RBI liquidity cut Browse all Bonds News withThe RBI raised its key policy rate by 25 basis points to 5.50% on Wednesday, abandoned its neutral stance and revised its inflation and growth projections higher.
The move aligns India with a broader wave of global monetary policy tightening, as major central banks raise interest rates.
Live Events
"We see (a) shallow rate hike cycle (by the RBI) of another 50 basis points over next 6 months to align with global macro drop," said Kaustubh Gupta, chief investment officer, fixed income, at Aditya Birla Sun Life AMC.
Traders expect tighter domestic financial conditions and potential RBI liquidity absorption to keep bond prices under pressure.
Contrary to market expectations, the central bank did not announce any additional measures to drain surplus liquidity from the banking system on Wednesday.
"We believe the RBI is likely to maintain its focus on liquidity management. Rate hikes without corresponding liquidity tightening could prove less effective," said Rajani Sinha, Chief Economist, CareEdge Ratings.
The RBI sold bonds worth 1 trillion rupees ($10.35 billion) by last month, the largest amount in at least a decadeand may announce more such operations, traders said.
The Indian debt market is also grappling with supply pressures as states and the central government plan to raise their issuance of longer-dated notes in the coming months.
Rates
India's overnight indexed swap rates traded mixed as investors searched for fresh cues.The one-year OIS rate fell 1 bp to 6.24%, the two-year rate dropped 1.25 bps to 6.44%, and the liquid five-year rate held at to 6.7250%.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onaditya birla sun life amcReserve Bank of IndiaIndian government bondsinterest rate hikemonetary policybond yieldliquidity management
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onaditya birla sun life amcReserve Bank of IndiaIndian government bondsinterest rate hikemonetary policybond yieldliquidity management
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...morelessPrime ExclusivesInvestment IdeasStock Report PlusePaperWealth EditionOnion inflation at 108%? Yes, but not really. What is different this time?
Curbing rupee bets: What the RBI’s new rules mean for the hedge-now-or-wait question
Brinjal, buffalo, bacteria: Inside India’s pay-for-nature system
Homebuyers wait as NCLT panel picks holes in unfinished Jaypee projects
The NBFC saga - Part 3: How one default in 2018 changed the way RBI reads risk
Four rules made HDFC Bank a compounder. All four have stopped. Can the new CEO rewrite them?
- 1
- 2
- 3
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET
Unlock Access to All Exclusives with ETPrime FREE TRIAL
15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers
Trial offer expiring in00 : 05 : 00
I'd rather pay ₹2599 nowUh-oh! This is an exclusive story available for selected readers only.
Worry not. You’re just a step away.
Prime Account Detected!
It seems like you're already an ETPrime member with
Login using your ET Prime credentials to enjoy all member benefits
Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.
Unlock ETPrime's Exclusive Stories Today!
Big Price Drop! Flat 40% Off
Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In nowOffer Exclusively For You
Save up to Rs. 700/-
ON ET PRIME MEMBERSHIP
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get Flat 40% Off
Then ₹ 1749 for 1 year
Avail OfferOffer Exclusively For You
ET Prime at ₹ 49 for 1 month
Then ₹ 1749 for 1 year
Avail OfferSpecial Offer
Get flat 40% off on ETPrime
Avail OfferAvail OfferClaim NowAlready a Member? Sign In nowNeed Assistance?
Connect with an ETPrime expert for personalized support and guidance
+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '' + h3 + '
' + h4 + '
- ' + listing + '
What’s Included with
ETPrime Membership
1Exclusive Insights That Matter
Uncover the truth with our investigative stories
Make strategic moves using the real-world case studies
Read industry-specific stories to identify emerging trends
Spot opportunities with in-depth insights that matter
Trump temper on H-1B visas is forcing Indians to do these things to stay put in US
What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.
Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?
The problem with lab grown diamonds
Why a falling rupee is a better option for the economy
A list of top 20 momentum stocks that have delivered massive returns in one year
2Invest Wisely With Smart Market Tools & Investment Ideas
Alpha Trade
Get daily trade ideas from SEBI-registered research analysts.
Investment Ideas
Grow your wealth with stock ideas & sectoral trends.
Stock Reports Plus
All-in-one stock research with Stock Score, peer comparison & key signals.
BigBull Portfolio
Get to know where the market bulls are investing to identify the right stocks.
Stock Analyzer
Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.
Market Mood
Analyze the market sentiments & identify the trend reversal for strategic decisions.
Stock Talk Live at 9 AM Daily
Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.
3Stay informed anytime, anywhere with ET ePaper
ePaper - Print View
Read the PDF version of ET newspaper. Download & access it offline anytime.
ePaper - Digital View
Read your daily newspaper in Digital View & get it delivered to your inbox everyday.
Wealth Edition
Manage your money efficiently with this weekly money management guide.
TOI ePaper
Read the PDF version of TOI newspaper. Download & access it offline anytime.
Deep Explainers
Explore the In-depth explanation of complex topics for everyday life decisions.
Health+ Stories
Get fitter with daily health insights committed to your well-being.
Personal Finance+ Stories
Manage your wealth better with in-depth insights & updates on finance.
5Enjoy Complimentary Subscriptions From Top Brands
Stream new documentaries from all across the world every day.
Stories you might be interested in
Figures reflect the source report and its stated period. This article is for information and is not investment advice.
