Mumbai, April 8 Indian bond yields ended nearly 0.15 per cent lower on Wednesday, taking comfort from the conditional ceasefire in the West Asia conflict, and the Reserve Bank of India (RBI) maintaining the status quo on policy rates.
According to the Clearing Corporation of India (CCIL), the 10-year benchmark bond yield ended at 6.8984 per cent compared to 7.0443 per cent at the previous close.
Even though bond yields have eased, the central bank, in its monetary policy report, has projected a 10-year bond yield of 7 per cent for FY27, and 6.9 per cent in FY28, against 6.8 per cent in FY26.
The main factor contributing to the easing of bond yields was the sharp decline in international Brent crude oil prices following the conditional two-week ceasefire between Iran and the US.
Following the ceasefire, Brent crude oil prices fell by 15 per cent to USD 92.78 per barrel. This helped improve the sentiment among bond traders in India, as lower rates reduce the risk of imported inflation and reduce pressure on the local currency due to lower demand for dollars.
The ceasefire in the West Asia conflict is conditional for two weeks, during which shipping traffic will be allowed through the Strait of Hormuz. This came after more than a month since the US and Israel launched coordinated attacks on Iran, and hours after President Donald Trump threatened that "a whole civilization will die tonight".
Additionally, the status quo on policy rates has also helped bond yields to decline marginally, experts said.
"With regard to the shape of yield curves, the government bond curve has started to steepen again, reflecting relief from any expectations of a policy rate hike," said Suyash Choudhary, CIO-Fixed Income, Bandhan AMC.
The central bank's six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, citing heightened uncertainty following the West Asia conflict, which drove crude prices sharply higher, weakened the rupee, and disrupted trade flows.