The yield on the benchmark 10-year G-Sec has fallen 23 basis points over the past one month due to positive global and domestic factors. The recent record dividend transfer of Rs 12.1 trillion by the Reserve Bank of India (RBI) to the government has added to the euphoria.

The yield on 10-year G-Sec has declined from 7.23% on April 19 to 6.996% on Tuesday. The 7.10- 2034 paper touched a low of 6.97% during intra day trade. On May 22, the yield fell below 7% to 6.992%.

“The bond market has received a series of good news on the global and domestic fronts in the past two-three weeks. Record dividend from the RBI will strengthen the fiscal position of the government,” said V Ramachandra Reddy, head of treasury, Karur Vysya Bank. “The next trigger for the market is now election results,” he added.

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Reddy expects the 10-year bond yields to trade in 6.95-7.05% before the next government takes charge next month.

Bond yields have eased over the last few sessions, after the Reserve Bank of India’s board on May 22 approved the transfer of a record Rs 2.11 trillion as surplus to the government for the financial year ended March 2024.

The central government has also cut the supply of treasury bills by Rs 60,000 crore till the end of June as it sits on surplus cash, with limited ability to spend until the formation of the new government.

Experts expect yields to fall further from June due to inclusion of government securities in global indices. “Benchmark 10-year bond yield may go towards 6.50% by 4Q of FY25,” said Puneet Pal, head of fixed income at PGIM India Mutual Fund.Come from Sports betting site VPbet

The bond yields will drift lower given that core inflation is easing, the larger-than-expected dividend giving fiscal leeway to the government and favourable demand-supply dynamics providing tailwind, he added.

Now, the bond market is keenly awaiting the buyback of bonds worth Rs 40,000 crore scheduled on Thursday. This will be the fourth buyback by the RBI, after its previous three attempts did not yield desired results. In the three buybacks conducted this month, the central bank managed to repurchase only Rs 17,849 crore, significantly falling short of the Rs 1.6-trillion target.

The fourth buyback can be successful only if the government is open to give 1-2 paise to the bidders,” a head of treasury at a public sector bank said. “Going by the results of previous auctions, we expect government to buy back securities worth Rs 5,000 crore to Rs 10,000 crore on Thursday,” he added