Government bonds are likely to begin the new week on a cautious note as focus turned back to oil prices after tensions marked the first round of peace talks, with Iran closing a crucial transit point and the US threatening to restart attacks.
The yield on the benchmark 6.94% 2036 note is likely to move between 6.823 and 6.88%, according to a trader with a private bank. It closed at 6.8533% on Friday, posting its fourth consecutive weekly decline. Yields move inversely to bond prices.
“Though the current developments do not change the overall view, it makes the journey towards 6.80% target a bit more complicated,” the trader said.
The benchmark Brent crude contract eased below $80 per barrel in Asian trading, after the first round of talks between Iran and the US resulted in the two countries agreeing to a roadmap toward a final deal within 60 days.
Shipping through the Strait of Hormuz had slowed on Sunday, pushing crude prices higher, after Iran closed shipping and peace talks began on a bumpy note.
Fluctuations in oil prices impacts India as the nation imports nearly 90% of its crude oil requirement and a sustained fall could ease inflationary pressure and support the rupee, helping the central bank’s efforts to attract dollar inflows.
Foreign investors have injected more than $2.25 billion into domestic bonds so far in June.
The Reserve Bank of India’s rate panel chose to adopt a wait and watch approach in keeping interest rates on hold earlier this month, to see if higher oil and food prices are likely to lead to more generalized inflation, minutes of the committee’s meeting released on Friday showed.
RATE
India’s overnight index swap rates are likely to remain little changed in early deals after recent declines.
The one-year swap rate ended at 5.9%, and the two-year rate closed at 6.06%. The five-year rate settled at 6.34% on Friday.
Published on June 22, 2026