Daijiworld Media Network - New Delhi

New Delhi, May 31: The Indian bond market is showing strong gains as inflation eases and expectations rise for further Reserve Bank of India (RBI) rate cuts, according to a Jefferies report.

India’s inflation dropped to 3.2% in April 2025—the lowest since July 2019—giving RBI room to cut policy rates by 50 basis points so far, with another 75 basis points expected by year-end.

Indian government bonds have become attractive to long-term investors, outperforming US Treasury bonds by 51% in dollar terms since April 2020. Jefferies noted the possibility that India’s 10-year bond yield may fall below that of the US.

The strength of the rupee and emerging market bond performance are boosting confidence. A global sovereign bond portfolio now holds India’s 15-year bond as its largest stake at 25%, with a yield of 6.38%.

This trend signals a shift away from traditional G7 bonds toward emerging markets like India, offering higher yields, stability, and currency gains, positioning India’s fixed-income market for continued growth.