•India G-Sec yields moved within a range of 6.63–6.78%, eventually closing 4 bps lower at 6.66% in February. •The movement was driven by multiple factors, including the FY27 Union Budget, RBI monetary policy decisions, government bond switches, escalating US–Iran tensions, a rise in crude oil prices, currency movements, OIS rate trends, and expectations of RBI support. •Bond prices declined after the FY27 Union Budget pegged the government’s gross market borrowing at a record INR 17.2 trillion, exceeding market expectations of around INR 16.5 trillion. Meanwhile, at the RBI MPC meeting, the committee kept the repo rate unchanged at 5.25% and maintained a neutral policy stance, which tempered expectations of further rate cuts. •The market also responded to the latest macroeconomic data releases. CPI inflation for January came in line with market expectations at 2.75%, lending support to bond prices. However, prices declined after India’s Q3FY26 GDP growth printed below expectations at 7.8%. •Alongside the RBI’s measures, the government conducted its first bilateral bond switch since May 2025. The move was aimed at effectively reducing the government’s record gross borrowing target of INR 17.2 trillion, as the switch would lower the amount of bond redemptions scheduled during the financial year.
