Indian bond yield sees biggest spike in 8 months on uncertainty over election results 2024; 10-year yield above 7%

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Also Read: Investors lose ₹20 lakh crore within first 20 mins of trade as election race gets tighter than what exit polls predictedThe trends in the election results showed that Prime Minister Narendra Modi’s National Democratic Alliance (NDA) was leading, but with an unclear margin. The trends were not in-line with the exit polls, which indicated a thumping majority for the BJP, leading a sharp rally in the Indian stock market on Monday.

“Markets had clearly not factored in such a scenario, which is leading to strong upward moves in yields, and the election-led uncertainty is expected to persist, till we start seeing some clear victories for the incumbent government," a trader with a state-run bank told Reuters.Also Read: Why is Indian stock market falling today? — explainedAnalysts believe the fiscal consolidation trajectory may by impacted if the BJP forms government with a weak mandate, and even the active foreign flows may take some breather, with only passive flows coming in as Indian bonds get included in JPMorgan's debt index by end of this month, Reuters reported.The Reserve Bank of India (RBI) will also announce its monetary policy decision on Friday. The central bank is widely expected to keep repo rates and stance unchanged, but commentary on inflation and liquidity management would be watched out for.Siddharth Kothari, an economist at Sunidhi Securities & Finance, said he expects the benchmark bond yield to be in a 6.95%-7.05% range till the RBI policy, Reuters reported.