Indian bond market shines amid falling inflation: Jefferies

THE Indian bond market is showing strong performance as inflation continues to ease and expectations grow for further interest rate cuts by the Reserve Bank of India (RBI), according to a report by Jefferies.

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Inflation in India has been coming down steadily. Over the last financial year, average inflation was 4.6 per cent, and in April 2025, it dropped to just 3.2 per cent -- the lowest level since July 2019.

This has given the RBI more flexibility to cut interest rates to support economic growth. So far, the central bank has already reduced policy rates by 50 basis points, and Jefferies predicts another 75 basis points of cuts by the end of 2025.

These developments have made Indian government bonds more attractive, especially to long-term investors.

In comparison to bonds from developed markets like the US, Indian bonds are currently offering better returns, the report said.

Since April 2020, India's 10-year government bond, which is denominated in rupees, has