• On Tuesday, the 10-year benchmark government bond (6.48% GS 2035) opened flat at 6.60% ahead of SDL auction. • Over the day, 10Y yields dropped after the result of the state bonds auction came largely along expected lines. Some longer-tenor bonds cleared at lower-than-expected yields (e.g., Andhra Pradesh 2036–2043, Haryana, Manipur), reflecting better demand for longer maturities. Overall, the auction outcome was largely in line with market consensus, with no major surprises across states or maturities. • At the state bond auction worth ~INR 354.50 Bn, RBI offered 10Y Tamil Nadu at 7.42% and10Y Andhra Pradesh at 7.44%. • Indian rupee ended higher at 89.79/$ vs 89.98/$. While the 10Y point closed 2 bp lower at 6.58% vs 6.60%. • The latest banking system liquidity stayed in deficit of ~INR 715.84 Bn. RBI conducted 2-day VRR auction for INR 2000 Bn was partially subscribed at 5.26%.
