All eyes are on RBI debt buying as bonds remain stable at the open.

The 10-year benchmark yield on Indian bonds was trading at 6.6769 percent at the opening on March 13. While the wider market awaits the Reserve Bank of India's open market operations later in the day, a surge in Brent crude is deterring buyers. After closing the previous session at 6.66 percent, the yield on 10-year bonds was currently trading at 6.67 percent. As Iran continues to block the Strait of Hormuz, a crucial shipping route for natural gas and oil, Brent crude was trading near $100 per barrel. Prices have not decreased much as a result of the US permitting the short-term purchase of Russian oil. Price pressures brought on by rising oil prices may also affect the yields on government bonds. To increase the liquidity of the banking system, the RBI would carry out an Open Market Operation (OMO) worth Rs 50,000 crore. On March 9, the RBI central bank carried out a buyback for the same sum. According to traders, the RBI has intervened in the bond market in recent sessions to maintain yields below the 6.7 percent threshold. Although it stayed within the central bank's inflation objective of between two and six percent, India's February inflation report was 3.21 percent, up from 2.75 percent in January. Indian government bonds opened on a steady note as market participants closely monitored the Reserve Bank of India’s planned open market operations. The central bank’s bond-buying programme is expected to inject liquidity into the banking system and support demand for government securities. Traders believe that continued RBI intervention can help keep bond yields under control and maintain stability in the domestic debt market. However, rising global crude oil prices have made investors cautious. Brent crude trading near the $100 per barrel mark has raised concerns about higher inflation in the coming months. Since India imports a large portion of its oil, a sustained increase in crude prices could increase transportation and production costs, which may eventually put upward pressure on bond yields. Despite these global concerns, India’s inflation remains within the Reserve Bank of India’s comfort range of 2 to 6 percent. Although February’s inflation was slightly higher than January’s, it still indicates relatively stable price conditions in the economy. This stability provides the central bank with some flexibility to manage liquidity through measures such as open market operations without tightening monetary policy immediately. Looking ahead, the direction of bond yields will depend on several factors including RBI policy actions, global oil prices, and investor demand for government debt. If the central bank continues to support the market through bond purchases and liquidity measures, it could help maintain stability in the bond market even amid global economic uncertainties.