India bonds sink on oil spike, index-entry uncertainty

Indian government bonds fell sharply, with the benchmark 6.94% 2036 bond yield rising 6.5 basis points on the week to 6.7799%, the steepest weekly gain in eight weeks. The sell-off was driven by a near 2% surge in Brent crude to $86 per barrel on US-Iran tensions, raising concerns about India's import bill and rupee pressure, alongside uncertainty over potential inclusion of Indian bonds in a Bloomberg index. Foreign investors remained net buyers, purchasing about 16.5 billion rupees of bonds under the fully accessible route from Monday to Thursday.