Archive · 14 Aug 2025
India's Long Bond Rally Falters on Fiscal, Demand Concerns
Imagine India's long-term bonds are like IOUs.
Their prices are dropping because fewer people want them, and the government isn't collecting as much tax money.
Also, the Reserve Bank of India might not cut interest rates again soon.
The government also plans to sell a lot more bonds.
Experts think the prices of these bonds might keep going down for a while, making them less attractive.
However, they could still be good for those investing for the long term.
It's a bit complicated right now.
India's long-duration bond rally is faltering due to reduced demand and fiscal concerns.
Rising fiscal concerns are attributed to slowing tax revenues and weaker nominal GDP growth.
The 10-year bond yield has increased since the RBI's rate cut in June.
A mismatch between the supply and demand for long-duration securities is growing.
Analysts suggest the rally in long bonds may be over, with near-term volatility a risk.
- Who
- Investors, economists, and the Reserve Bank of India (RBI).
- What
- The rally in India's long-duration bonds is faltering due to various economic factors.
- When
- The situation is ongoing; data is current as of August 14, 2025.
- Where
- India
- Why
- Due to dwindling demand, fiscal concerns, and limited potential for further rate cuts.
Market Outlook
Investor Sentiment
Market Volatility
Market Outlook
Some anticipate supply cuts could restore value in the long-term bond segment.
Investor Sentiment
Near-term volatility remains a risk for long-duration bonds.
- 10-year bond yield increase
- 24 basis points since June
- Nominal GDP growth forecast (FY2026)
- 8%–8.5%
- Government Fiscal Deficit Target
- 4.4% of GDP for the year
- Long bond supply
- ₹11.98 trillion
- Expected demand
- ₹10.82 trillion
