Indian government bonds rallied on Friday, with the benchmark 10-year yield posting its sharpest decline in more than a week.
The 6.94% 2036 bond yield fell 3.8 basis points to 6.7139%, marking a significant repricing of risk in the domestic fixed-income market.
The move was driven by a combination of softer oil prices, robust foreign inflows, and strong domestic demand.
As a major net importer of crude, India's fiscal outlook and inflation expectations are highly sensitive to energy costs.
The recent dip in oil prices has alleviated pressure on the current account and reduced near-term inflationary risks, prompting investors to rotate into sovereign debt.
This rally extends a broader trend observed over the past week.