Bond Yields Edge Higher As Supply Concerns Weigh On Sentiment

India’s sovereign bond market opened 2026 with a slight uptick in yields, reflecting cautious sentiment among investors. The 10-year benchmark government bond (IN064835G) yield rose to 6.5935 percent on January 1, compared to 6.5818 percent at the previous close.

The increase comes amid growing concerns over fresh debt supply, with the central government scheduled to auction ₹32,000 crore worth of bonds later this week. Additionally, states are expected to borrow up to ₹5 lakh crore during the January–March quarter, further intensifying supply-side pressures.
Despite the rise, yields remain within the expected range of 6.56–6.60 percent, supported by central bank liquidity measures and a third consecutive annual decline in yields through 2025.

Key Highlights

• India’s 10-year benchmark bond yield rose to 6.5935 percent on January 1, 2026.
• Previous close was 6.5818 percent, indicating a modest rise in investor caution.
• The central government plans to auction ₹32,000 crore worth of bonds this week.
• States may borrow up to ₹5 lakh crore in Q1, adding to supply concerns.
• Yields remain within the projected range, supported by RBI’s liquidity stance.
• 2025 marked the third straight year of annual yield decline, down 17 basis points.
• The bond market’s cautious start underscores the delicate balance between fiscal supply and monetary support as India navigates its 2026 borrowing roadmap.

Sources: Reuters, Economic Times, CountryEconomy.com