**Market Brief: Indian Government Bonds & FY27 Outlook** **Bond Yields Ease Amid Buying Support** Indian government bonds have extended gains for a second consecutive session, with the benchmark **10-year yield** cooling to **6.6972%**. Market sentiment is currently supported by expectations that the **Reserve Bank of India (RBI)** will continue its bond purchases to manage liquidity, offsetting concerns over the government's heavy borrowing calendar. **Record FY27 Borrowing Weighs on Sentiment** Traders remain cautious following the Union Budget announcement of a record **₹17.2 lakh crore** gross market borrowing plan for **FY27** (2026-27). This figure, representing a **~17% increase** over the previous year, has created a supply-demand imbalance, pushing yields higher earlier in the week before the recent cool-off. **RBI Policy & Liquidity in Focus** All eyes are now on the upcoming **RBI Monetary Policy** decision. The central bank is widely expected to maintain a **pause on rates**, keeping the repo rate steady while focusing on liquidity management. **Key Market Drivers** * **Supportive OMOs:** Investors are banking on continued **Open Market Operations (OMOs)** from the RBI to absorb the record debt supply. * **Yield Resistance:** The 10-year yield faces stiff resistance around the **6.78% - 6.80%** mark, a level tested immediately after the budget release. * **Fiscal Deficit:** The government aims for a fiscal deficit of **4.3% of GDP** for FY27, signaling a continued path of fiscal consolidation despite the elevated borrowing numbers. **Outlook** Short-term bond movements will be strictly dictated by the RBI’s commentary on **liquidity** and its willingness to support the market through the heavy supply months ahead. While no immediate rate cuts are priced in, the central bank’s "invisible hand" in the bond market remains the primary anchor for yields.