Archive · 11 Jun 2025
Corporates, Banks Sell G-Secs After Unexpected RBI Rate Cut
The Reserve Bank of India (RBI) lowered a key interest rate, which made some investors think bond prices would go down.
Because of this, companies and banks started selling government bonds to lock in profits.
They sold a lot of bonds, especially those maturing in the next few years.
Experts predict more selling, which might make the interest rates on these bonds go up.
Some banks are shifting to buying shorter-term bonds now.
This is all about how investors are reacting to the RBI's recent decision and adjusting their investments accordingly.
Corporates and banks sold government securities (G-Secs) after the RBI's repo rate cut.
The RBI's Monetary Policy Committee (MPC) unexpectedly reduced the repo rate by 50 basis points to 5.50%.
Corporate entities sold approximately Rs 20,000 crore worth of G-Secs.
The 6.33% 2035 G-Sec and the 6.79% 2034 G-Sec were among the top liquid papers sold.
Market participants anticipate the sell-off to continue, potentially pushing the 10-year G-Sec yield higher.
- Who
- Corporates, banks, and the Reserve Bank of India (RBI).
- What
- Corporates and banks sold government securities after the RBI's repo rate cut.
- When
- Following the RBI's Monetary Policy Committee decision.
- Where
- India
- Why
- To protect portfolios, book profits, and reposition based on market expectations of future interest rates.
- Repo Rate Cut
- 50 basis points to 5.50%
- Leading Corporate Sales
- Rs 20,000 crore
- G-Sec Sold (Top)
- 6.33% 2035 G-Sec and 6.79% 2034 G-Sec
- 10-year G-Sec yield (expected)
- 6.35-6.40%
- Selling Strategy Rationale
- Protecting portfolios and profit booking
