3 days ago
Indian Bond Yields Seen Range-Bound, Limiting Near-Term Trading Opportunities
A financial report says Indian government bond yields may move within a narrow range.
The expected range is 6.6% to 6.9%.
This means investors may have fewer chances to make quick trading profits.
The Reserve Bank of India recently kept its key interest rate unchanged at 5.25%.
It also expects the economy to grow by 6.7% in fiscal 2026-27.
The report expects inflation to be about 5.0%.
Possible interest-rate changes in the United States and Japan could affect India’s currency and money flows.
Motilal Oswal prefers investments that generate regular income, such as certain credit products and infrastructure trusts.
Motilal Oswal Private Wealth expects Indian government bond yields to stay between 6.6% and 6.9%.
The Reserve Bank of India held the repo rate at 5.25% and retained a neutral policy stance.
The report raised its fiscal 2026-27 GDP growth forecast to 6.7% and lowered its inflation forecast to 5.0%.
Potential rate increases by the US Federal Reserve and tightening by the Bank of Japan could pressure the rupee and capital flows.
Motilal Oswal favors accrual-oriented fixed-income strategies, while maintaining neutral views on broader equities and precious metals.
- Who
- Motilal Oswal Private Wealth, the Reserve Bank of India, and Ashish Shanker, Motilal Oswal Private Wealth’s managing director and chief executive officer.
- What
- A research report projected that Indian government bond yields will remain range-bound at 6.6%-6.9%, limiting near-term trading opportunities.
- Where
- India, with global monetary-policy developments in the United States and Japan also affecting the outlook.
- When
- The report was published on August 30, 2026; its outlook covers the near term, calendar year 2026, and early calendar year 2027.
- Why
- Softer inflation supports stable rates, while possible policy tightening abroad creates risks related to currency depreciation and capital outflows.
Key facts
- Expected bond-yield range
- 6.6%-6.9%
- Repo rate
- 5.25%, unchanged at the latest Monetary Policy Committee meeting
- Policy stance
- Neutral
- Fiscal 2026-27 GDP forecast
- 6.7%
- Inflation forecast
- 5.0%, reduced by 10 basis points
- 10-year benchmark yield
- Around 6.77%, after easing toward 6.75%-6.80%
- Preferred fixed-income allocation
- Accrual exposure of 55%-60%, including performing credit, private credit, high-yield non-convertible debentures, and infrastructure investment trusts
Quotes
Ashish Shanker
Managing Director and Chief Executive Officer of Motilal Oswal Private Wealth
“The 10-year G-Sec yield has softened to ~6.75-6.80%, near pre US-Iran war levels. We expect yields to remain range-bound at 6.6-6.9%, limiting near-term trading opportunities,”
thehindubusinessline.com
“We therefore continue to prefer accrual-oriented strategies across the credit spectrum and income-generating assets like InvITs as the core fixed-income allocation.”
thehindubusinessline.com
Sources
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