India bonds surge on Bloomberg index hopes, oil-led inflation relief

Indian government bonds surged on Thursday driven by strong foreign investment flows and hopes of inclusion in a major global Bloomberg index, pushing down borrowing costs. Easing inflation concerns from cooling oil prices, which have retreated from a peak above 120 dollars per barrel, added to the rally. However, a narrowing yield spread with US bonds (now around 220 basis points, the lowest since September 2025), rising global yields, and concerns over a potentially poor monsoon in 2026 remain key risks.