Indian government bonds rallied on Thursday, with the benchmark 6.94% 2036 issue seeing its yield drop one basis point to close at 6.7517%.
The move came as value-oriented investors stepped in to buy the dip following a selloff in the previous session, providing a counterweight to broader risk aversion triggered by escalating geopolitical tensions in the Middle East.
The price action highlights a divergence in market sentiment: while US-Iran war jitters and rising oil price risks weighed on global risk assets, domestic demand for Indian sovereign debt remained resilient.
Traders noted that the buying interest was driven by technical value rather than a shift in the macro outlook, suggesting that local liquidity conditions are currently insulating the bond market from external shocks.
This development follows a period of heightened volatility in energy and fixed-income markets.
Oil prices had advanced earlier in the week as geopolitical tensions intensified, casting a shadow over global growth expectations and pressuring government bonds in other jurisdictions.