Gilt yields hit multi-month highs; corporate bond trades touch new records

The Indian bond market is showing two clear trends, with government security yields moving higher while corporate bond trading records a sharp rise, pointing to wider participation across segments.

In the government securities market, yields have climbed to “multi-month highs.” The yield on the 6.48% 2035 gilt rose to around 6.6643%, its highest level since March 18. Market participants link the move to the absence of open market operation announcements by the Reserve Bank of India, which has reduced support for bond prices.

Global factors have also played a role. Higher US Treasury yields and a weaker rupee have added to pressure on domestic yields. At the same time, trading volumes in government bonds eased on local exchanges. Combined turnover on the National Stock Exchange and the Bombay Stock Exchange fell from ₹135 billion on Friday to ₹91.93 billion on Monday.

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In the corporate bond segment, secondary market yields edged up by 3 to 4 basis points. However, activity levels continue to rise, suggesting the segment is becoming a “mainstream investment avenue.”

The number of corporate bond trades has increased sharply. After 11.9 lakh trades in FY24, the current financial year has already seen 16.2 lakh trades up to November. Market estimates suggest the count could reach 24.32 lakh by FY26, implying an annualised growth rate of about 104%.

Trade volumes have followed a similar pattern. Against ₹17.1 lakh crore recorded in FY24–FY25, volumes have reached ₹14.96 lakh crore so far this year. Projections indicate total volumes could rise to ₹22.4 lakh crore by FY26, implying annualised growth of around 31%.

This rise in activity points to “increasing depth and liquidity” in the corporate debt market, even as yield movements remain sensitive to both global and domestic macro factors.

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