Indian sovereign bonds saw a rally early on July 27. The benchmark 10‑year yield dropped five basis points, trading at 6.7753% after closing the previous session at 6.8253%.
The decline was linked to a temporary halt in US‑Iran military strikes over the weekend. That pause lowered expectations of further conflict and pushed Brent crude prices down.
Brent fell almost 4%, settling near $93 per barrel, after the two sides agreed to hold off attacks. The Strait of Hormuz, a key energy route, has seen limited traffic as both sides imposed counter‑blockades.
India relies on imports for more than 85% of its energy needs. A fall in Brent prices helps ease the country’s inflation outlook and can keep bond yields lower.
Investors are now watching the Federal Reserve meeting on July 29. Most market participants expect the Fed to keep rates unchanged before resuming hikes later in the year.
The Reserve Bank of India will hold its bimonthly policy review next month. A poll shows 13 market participants favour a steady 5.25% policy rate in the August MPC meeting.
The rupee opened 41 paise higher, its biggest gain in almost two months, at 96.15 against the dollar after ending the previous session at 96.56. Foreign inflows also helped lift the currency.
Overall, easing geopolitical tensions, lower oil prices, and expectations of steady policy rates have boosted market sentiment and supported Indian financial markets.