The 10-year G-Sec yield is likely to trade at 6.45-6.55% in the remainder of FY2026. FPIs turned net sellers in Q2 FY2026, withdrawing $4.5 billion from India; while the equity segment saw sizeable outflows amounting to $8.7 billion, FPIs invested $4.2 billion in the debt segment.

• India’s yield curve steepens further at the end of Sep 2025: The 10-year G-Sec yields hardened in August and September 2025, rising to 6.57% as on September 30, 2025 (from 6.32% on June 30, 2025), however, was similar to the yield as on March 31, 2025 at 6.58%. The hardening was largely driven by concerns on US tariffs, and the reversion of stance by the RBI to 'neutral’ from ‘accommodative’, dampening the market expectations of further rate cuts.
• Bond issuances moderated in Q2 FY2026: Bond issuances moderated to Rs. 2.7 trillion in Q2 FY2026 from Rs. 3.6 trillion Q1 FY2026 (Rs. 3.0 trillion in Q2 FY2025) but remained reasonably high. The sharp fall in bond yields amid the slow pass-through of rate cuts to banks’ lending rates led to higher bond issuances in Q1 FY2026. The bond yields increased in Q2 FY2026, leading to shift of credit demand to banks from bonds.