Indian Bonds Climb on Heavy Buying, Fuel Speculation of RBI Intervention

Mumbai, Feb 25 : Indian government bond prices advanced in early trade on Wednesday after substantial purchases in the “others” investor category heightened expectations that the Reserve Bank of India (RBI) may have been among the buyers.

The benchmark 6.48% 2035 bond yield slipped to 6.6726% by 10:05 a.m. IST, compared with 6.6812% at the previous close. Yields have declined by four basis points over the past two sessions, reflecting a rise in bond prices.

Data from the clearing house showed that investors classified under the “others” segment made net purchases worth ₹74.84 billion on Tuesday the largest single day buying since June 2023. This grouping includes insurers, pension and provident funds, corporates, as well as the central bank.

Market participants said continued strong demand from this segment could extend the rally, particularly ahead of the government’s planned sale of ₹320 billion worth of the 10-year 2035 bond on Friday, the final auction of the financial year. Traders indicated that sustained inflows may help the paper clear around the 6.65% yield level.

Official weekly data detailing the RBI’s debt market operations is scheduled for release on March 6. Any confirmation of central bank participation would reinforce expectations of ample liquidity conditions.

So far this financial year, the RBI has purchased ₹6.83 trillion of bonds. Alongside measures such as a reduction in the cash reserve ratio and foreign exchange swaps, the central bank has injected approximately ₹11.5 trillion into the banking system.

In the derivatives segment, overnight index swap (OIS) rates were largely unchanged. The one-year OIS closed at 5.50%, the two-year at 5.6075%, and the five year rate edged slightly lower to 6.0325% in the previous session.