Indian government bond yields surged sharply on Tuesday, with the benchmark 10-year bond yield experiencing its largest increase in eight months. This spike was driven by early voting trends in the 2024 Lok Sabha election results falling short of market expectations.
The benchmark 10-year bond yield rose to 7.0130% from its previous close of 6.9438%. Earlier in the day, the yield reached 7.0375%, the highest in nearly two weeks, marking the most significant single-session climb since October 6, according to Reuters.
The rupee also declined, trading at 83.35 against the US dollar, down from 83.14 in the previous session, and hit an intraday low of 83.4375 in early trading.
Election trends showed that Prime Minister Narendra Modi’s National Democratic Alliance (NDA) was leading, but with an uncertain margin. These trends did not align with the exit polls, which had predicted a decisive majority for the BJP, leading to a sharp rally in the Indian stock market on Monday.
The Reserve Bank of India (RBI) will announce its monetary policy decision on Friday. The central bank is widely expected to keep repo rates and stance unchanged, but commentary on inflation and liquidity management will be closely watched.
Meanwhile, the Indian stock market benchmark indices, Sensex and Nifty 50, both dropped over 4%, erasing all of the previous day’s gains. At 11:00 am, the Sensex was down 3,255.97 points, or 4.26%, at 73,212.81, while the Nifty 50 was down 973.70 points, or 4.19%, at 22,290.20.
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