Locked In: India’s 10-Year Yield Refuses to Budge-What’s Fueling the Stability?

Image Source: Vajiram & Ravi

India's 10-year government bond benchmark yield (IN067934G=CC) opened firm at 6.3327% on 8 May 2025, little altered from yesterday's close of 6.3367%, signalling an orderly but alert bond market with the Reserve Bank of India (RBI) unabated in its liquidity support.

The 10-year yield has been trading in a tight 6.30%–6.35% range, supported by the RBI’s large-scale open market bond purchases and dovish policy cues, with analysts expecting further softening in yields this month.

RBI has pumped more than ₹3.65 trillion into the system via open market operations during the first four months of 2025, with another ₹500 billion bond purchase planned this week and more to come, providing healthy banking system liquidity.

The stability of the yield is in spite of global uncertainties and recent geopolitical tensions, with domestic factors such as a softer inflation print and a more accommodative RBI stance continuing to anchor market sentiment.

Bank of Baroda and other analysts observe that downside risks are still present, with yields expected to remain close to current lows as long as liquidity is abundant and inflation remains low.

The resilience of the bond market is also supported by revived foreign investor interest, following India's addition to major global bond indices and rupee stabilization.

With the liquidity boost from the RBI and a benign inflation scenario, India's bond yields are likely to stay range-bound, providing calmness to investors in the wake of a changing global environment.

Sources: TradingView, Economic Times, Trading Economics