The yield on India’s 10-year G-Sec rose to around 6.83%, reaching near four-week highs as demand for sovereign debt weakened after escalating tensions between the United States and Iran drove oil prices higher.
Investor sentiment deteriorated after the US completed an eighth consecutive night of strikes on Iran over the weekend, with both sides intensifying attacks following the collapse of an interim ceasefire.
The conflict has also choked the Strait of Hormuz, pushing Brent crude above $90 per barrel and heightening concerns over supply disruptions and imported inflation for major oil importers such as India.
Meanwhile, investors remained cautious ahead of a decision on the potential inclusion of Indian government bonds in the Bloomberg Global Aggregate Index, which could attract additional foreign inflows.
Foreign investors have already net bought more than $4.3 billion of Indian bonds since June 1 under the Fully Accessible Route.
