This movement came as initial voting trends indicated that Prime Minister Narendra Modi's National Democratic Alliance (NDA) was leading, although the margin of victory remained uncertain.
At 10:00 a.m. IST, India's benchmark 10-year yield stood at 7.0130%, marking a notable rise from its previous close of 6.9438%. Earlier in the day, the yield reached 7.0375%, the highest level in almost two weeks, and also registered its most significant single-session climb since October 6th, stated the report.
"Markets had clearly not factored in such a scenario, which is leading to strong upward moves in yields, and the election-led uncertainty is expected to persist, till we start seeing some clear victories for the incumbent government," a trader with a state-run bank was quoted as saying by Reuters.
According to the report, traders noted that if the government secures victory without a strong mandate, it could affect the fiscal consolidation path.
Further, active participation of foreign investors might pause momentarily, with only passive flows expected as Indian bonds are scheduled to be included in JPMorgan's debt index by the end of this month.
Experts also noted that the bond yields are likely to be in the range of 6.95%-7.05% till the Reserve Bank of India’s monetary policy decision on Friday.
According to the Reuters report, market analysts anticipate that the central bank will likely maintain the current policy rates and stance. However, the crucial focus will be on the central bank's commentary regarding inflation and its strategies for managing liquidity.