Indian government bond traders are extending recent gains in early deals on Tuesday, driven by a combination of renewed foreign investor interest and improving monsoon conditions.
The benchmark 6.94% 2036 bond is among the instruments seeing positive price action as underlying sentiment remains constructive across the fixed-income market.
The rally reflects a broader shift in risk appetite, with foreign portfolio investors increasing their exposure to Indian debt.
This inflow is bolstered by the latest agricultural data, which indicates a more favorable monsoon season than previously feared.
For traders, the improving weather outlook reduces the risk of inflationary pressure from food prices, allowing the Reserve Bank of India to maintain a more dovish stance on interest rates.
This development aligns with the broader positive trend seen in Indian equities, which closed the previous week with modest gains, marking a third consecutive week of advances.