With reference to India's benchmark 10-year government bond yield, consider the following statements: 1. The bond yield surged by 78 basis points over a period of one month. 2. Foreign Portfolio Investors (FPIs) sold ₹30,772 crore from Indian debt this fiscal year. 3. The benchmark 10-year government bond yield reached a peak of 7.61%. Which of the statements given above is/are correct?

India's 10-year bond yield nears 7.61% peak as FPIs sell ₹20,772 crore

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 26 October 2026

Impact of FPI capital flows and global oil prices on domestic bond yields: a GS3 Economy case study.

Why in news

India's benchmark 10-year government bond yield surged 78 basis points over four months, nearing a 7.61% peak as Foreign Portfolio Investors (FPIs) sold ₹20,772 crore from Indian debt this fiscal year.

Background

The 10-year government bond yield is expected to reach 7.75% by December 2026. The selloff is attributed to high crude oil prices, tight liquidity, and heavy bond supply.

Facts for Prelims

FactFPIs sold ₹20,772 crore from Indian debt during the current fiscal year.
FactThe benchmark 10-year government bond yield reached a peak of 7.61%.
FactThe yield surged by 78 basis points over a four-month period.

Prelims practice question

With reference to India's benchmark 10-year government bond yield, consider the following statements:

The bond yield surged by 78 basis points over a period of one month.
Foreign Portfolio Investors (FPIs) sold ₹30,772 crore from Indian debt this fiscal year.
The benchmark 10-year government bond yield reached a peak of 7.61%.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)3 only
(d)1, 2 and 3

Show answer

Answer: (c) 3 only — Statement 3 is correct. Statement 1 is incorrect: The yield surged over a four-month period. Statement 2 is incorrect: FPIs sold ₹20,772 crore from Indian debt.

For Mains

Q. Analyze how fluctuations in global crude oil prices and FPI capital flows impact the domestic bond yields and monetary stability of an emerging economy like India.

Dimensions to cover in your answer

Liquidity-Supply Mismatch: Persistent bond supply and tight liquidity draining market depth.
External Shock Transmission: Correlation between geopolitical-driven oil price spikes and inflation-led yield hikes.
Capital Flight Risk: Impact of FPI selloffs on emerging market debt stability.

Keywords: Bond Yield · Foreign Portfolio Investors · Liquidity · Monetary Tightening · Emerging Markets · Crude Oil Prices

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