New Delhi, April 16 (NationPress) The yield on India's benchmark 10-year government bond is projected to fall below the 7 percent threshold by June, despite ongoing fluctuations influenced by both global and domestic elements, according to a report released on Thursday.

Crisil Intelligence's analysis indicated that bond yields experienced considerable volatility in March, primarily due to a steep increase in crude oil prices and escalating geopolitical tensions, which caused the benchmark yield to reach its peak for the current fiscal year.

Nonetheless, decreasing inflationary pressures, favorable liquidity conditions, and anticipated policy changes are expected to contribute to the stabilization of yields in the upcoming months.

The report further stated that India's gross domestic product (GDP) growth is anticipated to be 7.1 percent in the current fiscal year, buoyed by strong private consumption and consistent investment growth.

Export growth is likely to benefit from reduced US tariffs, although challenges to global trade stemming from the conflict in West Asia and slower global economic growth may pose obstacles.

Additionally, government initiatives to control retail fuel prices could bolster consumption levels.

On the subject of inflation, Crisil forecasts that CPI inflation will average 4.5 percent in the fiscal year 2027.

It emphasized that domestic liquidity remains robust, expected to provide a buffer against external shocks, amid ongoing global uncertainties impacting market sentiment.

The report also pointed out that crude oil prices and geopolitical events, especially in West Asia, are significant risk factors for the bond market. High oil prices could heighten inflationary worries and restrict the pace of yield declines.

Simultaneously, global indicators, including fluctuations in US Treasury yields and the US Federal Reserve's policy direction, are anticipated to significantly influence the trajectory of Indian bond yields.

Domestically, the Reserve Bank of India's (RBI) liquidity management strategies and policy stance will be under scrutiny, as the central bank is expected to act as a stabilizing force amid volatile market conditions.

Crisil's analysis assumes that the Monetary Policy Committee (MPC) will keep policy rates unchanged during the current fiscal year.

Despite these challenges, Crisil maintains a moderately positive outlook, predicting that yields will gradually decrease as macroeconomic conditions improve and volatility diminishes.