Indian government bonds recovered ground on Wednesday, reversing earlier losses as investors digested softer-than-expected US inflation data.
The benchmark 6.94% 2036 bond yield settled at 6.7738%, reflecting a shift in sentiment toward a more dovish Federal Reserve outlook.
This repricing follows a period of volatility where Indian fixed-income markets had been weighed down by global risk-off flows and rising oil prices.
The recovery in Indian debt markets is closely tied to the broader cross-asset reaction to US macro data.
Lower US inflation expectations have reduced pressure on global yields, providing a tailwind for emerging market bonds.
However, the gains were capped by persistent geopolitical risks, particularly tensions involving Iran, which continue to support crude oil prices.