Indian bond yield rises 5 bps after GDP accelerates to a six-quarter high of 8.2% in Q2

Bond

Indian government bond yields rose 5 basis points (bps) during early evening trade after GDP grew to a six-quarter high of 8.2 percent in Q2.

The 10-year benchmark bond yield, which was trading at 6.47 percent before the release of data, has surged to 6.52 percent. The bond yields opened at 6.47 percent as compared to 6.463 percent at pervious close.

India’s economy extended its strong run for a third consecutive quarter, growing at a six-quarter high of 8.2 percent in July–September (Q2FY26) compared with 7.8 percent in the previous quarter, helped by robust manufacturing and a buoyant services sector, especially financial, real estate and professional services, according to official data released on November 28.

The economic print comfortably beat a recent Moneycontrol poll of economists, which had pegged Q2 growth at 7.3 percent, and was well above the Reserve Bank of India’s 7 percent projection for the quarter.

Experts said that the higher GDP print for the third quarter has led to an expectation that the central bank may delay the rate cut and hence bond market has seen a sell-off and rising yields.

However, few set of economists still believe that the central bank will deliver a 25 bps rate cut in December policy.

“Despite robust growth and a benign inflation environment, we expect the Monetary Policy Committee of the Reserve Bank of India to deliver a 25 bps policy rate cut in the upcoming review,” said Sujan Hajra, Chief Economist & Executive Director at Anand Rathi Group.

Similarly, Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank said despite the high real GDP growth they retain their expectations of 25 bps rate cut in the upcoming policy as inflation trajectory remains benign.