Indian government bonds are set to extend their recent slide in early Tuesday trading, pressured by a sharp rise in oil prices following the US reimposition of sanctions linked to escalating Middle East hostilities.
The benchmark 6.94% 2036 bond yield is expected to trade between 6.72% and 6.77%, reflecting continued selling pressure on sovereign debt.
The move underscores the vulnerability of emerging market assets to energy shocks.
As crude prices climb, traders are repricing inflation risks, which complicates the outlook for the Reserve Bank of India.
Higher energy costs threaten to keep domestic inflation sticky, limiting the central bank’s ability to cut rates aggressively despite broader global easing trends.
This development follows a period of volatility in Indian debt markets.