The yield on the 10-year G-Sec benchmark hit 6.51% — a four-month high — on Wednesday due to heavy sell-off from market participants, after which it retreated marginally. It finally closed a tad lower at 6.48%, compared to 6.49% in the previous session. During the day, it. The 10 year G-Sec opened at 6.39%, down 10 basis points (bps) from the previous close following a ‘fat-finger’ (input) error.
Heavy selling pressure since last policy
“The market has been in sell-off mode since the last policy due to unwinding of long duration positions by some players such as mutual funds, which continued today as well,” said Rajeev Pawar, head of treasury, Ujjivan Small Finance Bank. He added that some state-owned banks could have stepped in for value buying at higher yields which led to some recovery. There was also some short covering at the 6.50%, which brought the yield down, said dealers.
On Wednesday, the G-Sec market recorded a volume of 68,495 crore, higher than the daily average volumes of 59,000 crore in August. So far in August, the yields rose by 12 bps from 6.37% on July 31. The rise in yield has been on the back of rising volumes. In August 2025, the daily average volumes jumped 34% from 44,000 crore in July 2025.
Market eyes GDP data for direction
The weakness in the market is on expectation of no further rate cut, leading to heavy sell-off in the market.
Going ahead the market is likely to remain sideways and wait for incoming GDP data. “If that GDP print is really low, then probably we may see some sort of rally in hopes of another rate cut,” added Pawar of Ujjivan SFB.
Market participants said that the worst has been over and expect benchmark yield to recover to 6.40 levels in the short-term. However, it depends on the government securities auction on Thursday, said dealers.