Traders in Indian government bonds are targeting a decisive break below a critical resistance level in the benchmark 6.94% 2036 issue, with yields expected to trade between 6.72% and 6.78% on Tuesday.
The move marks a shift from the cautious tone that opened the week, as investors digest a confluence of geopolitical and structural catalysts favoring the fixed-income market.
The rally is being propelled by growing optimism surrounding potential de-escalation between the United States and Iran.
Reduced tensions in the Strait of Hormuz, a vital chokepoint for global energy supplies, are lowering risk premiums and supporting bond prices.
This geopolitical tailwind is compounding the technical setup, with bulls attempting to push yields lower after previous failed attempts to breach the key level.
Structural flows are also providing support.