Bond yields fell on Monday due to a fall in crude oil prices amid easing geopolitical concerns, according to dealers.
The yield on the benchmark 10-year government bond fell nearly 4 basis points (bps) on Monday to close at 7.15 per cent, down from Friday’s close of 7.19 per cent.
“The rally was primarily driven by a $2 decline in Brent crude following reports that Iran no longer intended to charge a toll, alongside easing geopolitical concerns and a reduction in the war-related risk premium,” said a dealer with a public sector bank.
Brent spot prices dropped to $95.16 per barrel from $97.18 per barrel.
The recent fall in oil prices has also opened up the possibility of a status quo by the six-member Monetary Policy Committee of the Reserve Bank of India at its next meeting, scheduled for December 2-4, 2026.
“December policy expectations have shifted from a 50-bps rate hike to a possible 25-bps or status quo. Overall, easing oil prices, geopolitical risk premiums and monetary policy expectations are gradually shifting market sentiment towards the long side,” the dealer added.
The benchmark yield had declined 23 bps last week, its sharpest weekly drop in nearly seven years, after the victory of the Democrats in the US midterm elections revived hopes of a resolution to the US-Iran war.
The rupee declined marginally against the dollar on Monday.
The rupee, which opened at 94.83 against the dollar — compared with the previous close of 93.91 — weakened to 94.14 during the day before cutting some losses to settle at 94.93.
Dilip Parmar, senior research analyst at HDFC Securities, said, “The Indian rupee registered a technical retracement, snapping a five-day winning streak amid state-run bank dollar buying ahead of a market holiday. The intraday correction followed morning gains catalysed by a soft dollar index, resilient foreign institutional inflows, and weaker crude oil pricing.”
