Indian bonds are likely to open sharply weaker on Monday, as investors digest ‍a larger-than-expected borrowing plan for the next financial year, while the ​central bank's bond-buying could lend some support.

The benchmark ‌10-year 6.48 per cent 2035 bond yield is likely ​to be in the 6.71 per cent-6.77 per cent range, according to a private bank trader. The yield closed at 6.6963 per cent on Friday. Bond yields move inversely to prices.

"The market was not expecting the budget to be very favourable for debt because the focus is not on aggressive fiscal consolidation, but ​the budget had no incentive for bond investors, and ⁠we would see the impact today," the trader said.

India unveiled its federal budget on Sunday for the fiscal year starting April, and ​the lack of any ⁠big-bang announcements and higher-than-expected borrowing has left the markets wary.

The government will gross borrow a record 17.2 trillion rupees ($187.38 billion) in 2026–27, which was higher than most market ‌estimates.

The gross borrowing will be 17 per cent higher than ‌the current fiscal year's ₹14.61 trillion, while the net borrowing would be ₹11.73 trillion, ‍up from ₹11.33 trillion.

A median of a Reuters poll of 35 economists estimated borrowing at 16.3 trillion rupees.

For ‍now, the only supporting factor for the market is the Reserve Bank of India that purchased bonds in the secondary market in the week ended January 23, and included liquid and former benchmark 6.33 per cent 2035 paper in this week's ₹500 billion bond purchase plan.

The RBI has already completed infusing more than ₹10 trillion into the banking ⁠system, which is a record for any financial year.

Rates

India's overnight index swap rates are expected to ​see paying pressure in line with government bond yields.

The one-year ⁠OIS rate ended at 5.5550 per cent on Friday, up 10 bps in January, while the two-year rate ended at 5.7050 per cent, up 15 bps. The five-year OIS rate rose 24 bps to 6.1625%, in its biggest monthly ⁠rise since October 2024.

Published on February 2, 2026