India's long-end debt gains on RBI bond buy picks

Core Viewpoint - The Reserve Bank of India's unexpected decision to purchase ultra long-dated government bonds, including a 25-year bond maturing in 2050, aims to address the demand-supply mismatch in the market and is expected to help lower yields on such securities [1][3]. Group 1: Central Bank Actions - The Reserve Bank of India plans to buy bonds worth up to ₹50,000 crores on Thursday, with a similar purchase expected on December 18 [1]. - The central bank's decision to include ultra long-term bonds in its open market operations is anticipated to increase demand and stabilize yields [3]. Group 2: Market Dynamics - There has been a demand-supply mismatch for ultra-long tenor bonds, with weak demand from insurers and pension funds leading to reduced purchases this year [2][7]. - The yield on bonds with maturities of 30 years and above has increased by 25-30 basis points in 2025, despite the RBI's interest rate cuts and significant bond purchases [2]. Group 3: Future Projections - The Indian government plans to sell 30-to-50-year bonds worth ₹127,000 crores from December to March, while the RBI is expected to buy around ₹2 trillion worth of bonds during the same period [4]. - Market reactions indicate a decrease in yields on the 30-year and 40-year bonds, reflecting optimism about improving demand and future purchases by the RBI [5].