Bond yield is at a record low of three years, this is the biggest reason for the rise

Government bond yields fell to a 3-year low on Thursday, March 27. The main reason for this is foreign investment, falling inflation and expectations of a possible rate cut by the RBI. The 10-year benchmark bond yield fell to 6.589%, the lowest since January 14, 2022. At that time it was 6.582%. The yield has fallen by 15 basis points since the beginning of March.

Foreign investors have invested ₹13,709 crore in government bonds so far in March. Foreign investment under the Fully Accessible Route (FAR) has reached ₹2.99 lakh crore, up from ₹2.85 lakh crore at the end of February.
 

1. Inflation remains below RBI's target of 4%. Due to better growth rate in the economy, a rate cut of 25 basis points is likely in April. Some experts believe that another cut may happen in June as well, taking the total cut to 75 basis points. 2. The government may soon announce the borrowing plan for the next business year. The total market borrowing for the financial year 2025-26 has been fixed at ₹14.82 lakh crore, which was ₹14.01 lakh crore in the previous financial year. However, net market borrowing will be ₹ 11.54 lakh crore, which was ₹ 11.63 lakh crore last year. 3. This decline in the bond market can bring both new opportunities and risks for investors. Now all eyes are on the upcoming monetary policy of RBI and the government's borrowing plan. 

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