Indian government bonds advanced on Tuesday, supported by a third consecutive day of declines in both oil prices and US Treasury yields.
The benchmark 6.94% 2036 bond yield traded at 6.7613%, reflecting improved investor appetite for emerging market debt as global risk sentiment stabilized.
The rally in Indian debt comes as lower energy costs ease inflationary pressures, while the retreat in US yields reduces the opportunity cost of holding local currency assets.
This cross-asset dynamic has been a key driver for Indian bond performance in recent sessions, with traders closely monitoring the interplay between global rates and commodity prices.
However, the upside potential for Indian bonds may be limited in the near term due to looming state supply.
The Indian government is expected to issue new debt, which could add selling pressure to the market and offset some of the gains driven by external factors.