RBI's rate cut likely to lower bond yields as govt announces Rs 26,000 cr G-Sec buyback

By Nikhil Dedha
New Delhi [India], June 9 (ANI): Bond yields in India are expected to go down following the recent frontloaded rate cut by the Reserve Bank of India (RBI), says economists ANI spoke with.
The economists noted that rate cut is likely to influence the market to adjust to a revised and more accommodative interest rate outlook, pushing dated government securities (G-sec) yields down further.
Debopam Chaudhuri, Chief Economist at Piramal Group told ANI 'The frontloaded rate cut is likely to drive a further easing in dated G-sec yields as markets adjust to a revised interest rate trajectory. The RBI's shift to a neutral stance could be initially interpreted as a signal of a pause in the rate-cut cycle'.
He further stated that 'these are likely to be short-term adjustments, and bond yields are expected to resume their downward trend once market volatility subsides'.
However, in the near term, some upward pressure on yields may emerge as investors may look to book profits after the rally in bond prices. Moreover, the RBI's shift to a neutral policy stance may be initially read by markets as a pause in the rate-cut cycle, which could also cause some temporary volatility in yields.
Additionally, the US Federal Reserve is also anticipated to lower its terminal interest rate to around 4 per cent, creating more room for the RBI to continue with its rate-cutting approach.
Dipanwita Mazumdar, Economist specialist at Bank of Baroda told ANI 'India's long end yields especially the 10Y part of the curve has priced in the rate cut. Thus we expect it to be largely capped as the change in stance has hinted lesser scope for future monetary policy easing. Hence we do not expect much momentum. However, the short run part of the curve will be more susceptible to the liquidity support given by RBI especially through CRR cut. Thus we expect some prevalence of a steeper yield curve for India in the near term'.
In a parallel move aimed at managing its debt portfolio and supporting the bond market, the Government of India has announced a buyback of dated securities worth Rs 26,000 crore (face value).
The buyback will be conducted through an auction on June 12, 2025. It will include five securities maturing in 2026: 5.63 per cent GS 2026 (maturing on April 12), 8.33 per cent GS 2026 (July 9), 6.97 per cent GS 2026 (September 6), 5.74 per cent GS 2026 (November 15), and 8.15 per cent GS 2026 (November 24).
There is no notified amount for individual securities within the Rs 26,000 crore ceiling. The auction will be held on RBI's E-Kuber system between 10:30 a.m. and 11:30 a.m., and the results will be declared the same day. Settlement will take place on June 13, 2025.
With the rate cut and the government's buyback initiative, economists believe bond yields will continue their downward trend in the medium term, providing further support to market liquidity and helping lower borrowing costs for the government. (ANI)

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Economic Times

35 minutes ago

• Economic Times

Ideaforge Technology shares hit 10% upper circuit after bagging Rs 137 crores order to supply mini UAVs to MoD

Ideaforge Technology share price target Live Events About Ideaforge Technology (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Shares of Ideaforge Technology surged 10% to hit the upper circuit at Rs 631.6 on the BSE on Monday, following a major order win from the Ministry of Defence (MoD).The company announced in a stock exchange filing that it has secured an order worth approximately Rs 137 crore (all-inclusive) to supply Mini Unmanned Aerial Vehicles ( UAVs ) along with accessories to the MoD. The delivery is expected to be completed within 12 to Trendlyne, the average analyst target price for Ideaforge Technology is Rs 388, implying a potential downside of around 39% from current levels. Of the two analysts tracking the stock, the consensus rating is 'Sell'.On the technical front, the stock's Relative Strength Index (RSI) stands at 56.6, indicating neutral momentum. It continues to trade above its 20-day, 50-day, 100-day, and 200-day simple moving averages (SMAs).Year-to-date, shares have risen around 64%, though the stock is still down about 18% over the past 12 months. The company's current market capitalisation is approximately Rs 2,727 is one of India's leading manufacturers of Unmanned Aircraft Systems (UAS), catering to mapping, surveillance, and security needs across sectors such as defence, mining, and company boasts the largest operational deployment of indigenous UAVs in the country, with one drone reportedly taking off every five minutes. It has in-house capabilities for designing, engineering, and manufacturing UAVs, ensuring high performance and reliability.A pioneer in India's drone space, Ideaforge developed vertical take-off and landing (VTOL) UAVs as early as 2009, setting the stage for its strong presence in both government and commercial drone applications.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

Business Standard

38 minutes ago

• Business Standard

INR commences weak amid firm dollar and surging international oil prices

The Indian rupee edged lower in opening trades on Monday tracking firm dollar overseas. Escalating tensions in the Middle East drove investors to the safe haven currency and send oil prices soaring. INR opened lower by around 18 paise at Rs 86.75 per dollar. On Friday, rupee snapped its three-day losing streak and settled with a gain of 18 paise at 86.55 against the US dollar. Indian shares also look set to open on a sluggish note Monday, tracking weak cues from Asian markets and a spike in oil prices that is also adding pressure on the local unit. Asian stock markets are trading mostly lower on Monday, following the mixed cues from Wall Street on Friday, amid escalation in the middle-east conflict after the U.S. joined Israel in the weeks-long war with Iran, with US carrying out a "successful" airstrike on three nuclear sites in Iran over the weekend. This has heightened fears of a broader regional conflict. Meanwhile, India's forex reserves rose USD 2.294 billion to USD 698.95 billion for the week ended June 13, the RBI said on Friday. For the week ended June 13, foreign currency assets, a major component of the reserves, rose by USD 1.739 billion to USD 589.426 billion, the data released on Friday showed.

NDTV

38 minutes ago

• NDTV

Matter Motors Plans To Go Public In The Next 3-4 Years; Looks To Expand & Export Soon

Ahmedabad-based electric motorcycle startup Matter Motors is gearing up for aggressive expansion, both in terms of product and capacity, with plans to raise USD 200 million (approx. Rs. 1,730 crore) over the next few years. The funding will support the rollout of new models and the ramp-up of production. The big news is that the startup is also eyeing a public listing within the next 3-4 years in a bid to raise capital. Matter has so far focused on a single product - the Aera, India's first electric motorcycle equipped with a 4-speed manual gearbox. Priced at around Rs. 1.8 lakh, the Aera is currently available in Ahmedabad and Bengaluru, with deliveries having commenced in late 2024. The company has already raised USD 75 million through Series B rounds, placing its current valuation at approximately USD 230 million (Rs. 1,990 crore). Notable investors include Helena, Capital 2B, Japan Airlines & Translink Innovation Fund, LetsVenture, Baring Private Equity Partners, and Saad Bahwan Investment Management Company (SB Invest). While Matter's primary focus remains the domestic push for the Aera electric motorcycle, international ambitions are not far behind. From 2025, the startup intends to explore export opportunities in South East Asia, Eastern and Southern Europe, East Africa, and Latin America. The company currently has no plans to branch out into electric scooters or premium electric motorcycles. Presently, it competes with the likes of Revolt Motors, Oben Electric, and Ola Electric in the sub-200cc equivalent electric motorcycle space. Manufacturing currently takes place at a pilot facility in Ahmedabad, which the company is in the process of scaling up. The plant's capacity is expected to hit 1.2 lakh units annually, with a target to roll out 5,000 motorcycles per month by mid-2026. Matter has indicated that once this capacity is optimally utilised, it will begin scouting for a new, larger manufacturing facility.