Sentiment has weakened since the RBI released minutes of its August meeting on Wednesday, which struck a more hawkish tone than its policy statement.
Indian government bonds steadied early on Friday as oil prices stabilised, offering some relief after hawkish central bank minutes and a crude price spike put the market on track for its worst week since early April.
A ₹28,000 crore ($2.93 billion) debt sale later in the day will test demand, with a 15-year bond making up more than half the supply.
The benchmark 6.94 per cent 2036 bond yielded 6.8723 per cent at 10:45 am IST, perched near Thursday’s close and a two-month high. The yield has risen about 12 basis points this week, on track for its biggest weekly increase since April 3.
“There is a weakening bias in the market because of the hawkish RBI policy minutes, though the auction should see sufficient demand,” said Gopal Tripathi, head of treasury and capital markets at Jana Small Finance Bank.
Brent crude futures eased into a holding pattern at $93.5 a barrel in Asian trade.
Sentiment has weakened since the RBI released minutes of its August meeting on Wednesday, which struck a more hawkish tone than its policy statement.
Expectations of an RBI rate hike this year have resurfaced as inflation pressures build, while domestic support has ebbed after the central bank brought forward by a month the closure of a dollar-attracting scheme that had been a key source of bond demand.
Retail inflation in July accelerated to 4.45 per cent, above the RBI’s 4 per cent medium-term target.
Traders said higher oil prices and global yields would shape the market’s next move. The US 10-year Treasury yield was near 4.70 per cent, adding pressure.
RATES
India’s overnight indexed swap rates awaited fresh cues after a sharp rise in the previous session.
The one-year swap rate was flat at 5.9250 per cent, while the two-year rate rose 1 bp to 6.17 per cent. The liquid five-year rate was little changed at 6.4725 per cent.
Published on August 21, 2026
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