India’s 10-Year G-Sec Holds Firm as State Yields Defy Forecasts

The Indian bond market has surprised investors with state debt yields falling below expectations, a development that has turned sentiment in favour of bond bulls. According to market reports, despite record borrowing plans by both central and state governments, yields have moderated due to strong demand, easing inflation, and RBI’s regulatory support.

The 10-year government bond yield is hovering around 6.68%, lower than anticipated, as investors digest measures curbing speculative activity and ensuring stability in financial markets. Analysts highlight that while global yields remain elevated, India’s domestic factors particularly fiscal discipline and supportive monetary policy are cushioning the impact.

This trend suggests a more stable outlook for FY26–27, with bond bulls regaining confidence in India’s debt market.

Key Highlights

• State Debt Yields: Came in below market estimates, boosting sentiment
• 10-Year G-Sec: Trading near 6.68% amid strong demand
• RBI Measures: Tightened speculative lending, improving stability
• Global Context: Elevated global yields, but India cushioned by domestic factors
• Investor Outlook: Positive momentum for bond bulls in FY26–27

India’s bond market resilience underscores its attractiveness for long-term investors, even amid global uncertainties.

Sources: Quantum AMC Debt Monthly (Feb 2026), India 10-Year G-Sec Data, The Financial Express