Market members mentioned the reversal was primarily as a consequence of deterioration in global threat urge for food.
Foreign portfolio investor (FPI) flows into authorities securities underneath the absolutely accessible route (FAR) turned negative in March 2026, reversing the influx pattern seen earlier this 12 months as global threat sentiment weakened.
“From an FPI perspective, equities are clearly in negative territory, and even on the debt side, the perceived weakness in the rupee is weighing on sentiment. As a result, bonds are not particularly attractive to foreign investors right now,” mentioned the treasury head at a personal financial institution.
At the identical time, rising US Treasury yields made rising market debt much less engaging, resulting in a shift in global capital away from markets resembling India. Traders mentioned foreign money volatility together with increased global yields lowered the enchantment of hedged returns on FAR bonds.
Despite the outflows, the affect on bond yields remained restricted as a result of Reserve Bank of India’s intervention by means of bond purchases and liquidity measures. Analysts mentioned these steps helped hold the sovereign yield curve steady whilst international demand weakened.
“I don’t see yield (on the benchmark 10-year government bond) falling sharply below 6.5 per cent, nor do I expect an immediate spike to 7 per cent. At this stage, the market is likely to remain range-bound, with yields broadly moving between 6.55 per cent and 6.75 per cent in the near term,” mentioned a vendor at a personal financial institution.
First Published: Mar 22 2026 | 4:17 PM IST