Indian government bonds are poised for a sharp sell-off at the start of the new month, with the benchmark 6.94% 2036 bond yield expected to climb to 6.90% in early deals on Monday.
The move follows a significant repricing event triggered by India's exclusion from a major global bond index, which has forced passive funds to unwind positions and sparked broader selling pressure across the sovereign debt market.
Equity markets have also faced headwinds, with the benchmark Sensex dropping more than 500 points to an intraday low of 77,063 earlier in the week.
The sell-off marks a continuation of the volatility seen late last week, when the benchmark yield ended Friday's session at 6.7799%, representing the largest weekly increase for the instrument in eight weeks.
The exclusion from the index has removed a key source of foreign inflows, leaving the market vulnerable to further outflows as institutional investors adjust their portfolios to align with the new index composition.
This development adds to a broader period of stress for Indian financial markets.
Equity markets have also faced headwinds, with the benchmark Sensex dropping more than 500 points to an intraday low of 77,063 earlier in the week.