India's Bond Yields Likely to Drop Following RBI's Rate Cuts

Economists predict a decline in India's bond yields as the Reserve Bank of India's rate cuts reshape interest rate expectations. The government's Rs 26,000 crore bond buyback, alongside the US Federal Reserve's rate adjustments, contributes to market dynamics, despite potential short-term volatility.

India's bond yields are anticipated to decrease in response to the Reserve Bank of India's (RBI) recent aggressive rate cuts, according to economists consulted by ANI.

These experts suggest that the eased interest rate outlook is likely to push dated government securities (G-sec) yields lower as markets adapt. Debopam Chaudhuri, Chief Economist at Piramal Group, indicated that the RBI's move to a neutral stance might initially suggest a pause in the rate-cut trajectory.

There could be temporary upward pressure on yields as investors capitalize on bond price rallies. However, the US Federal Reserve's potential rate decrease and India's bond buyback plan are expected to encourage long-term yield reductions, enhancing market liquidity and reducing borrowing costs.

(With inputs from agencies.)