Indian government bonds are set to extend their gains as optimism grows over a potential peace deal between the U.S. and Iran, which has positively influenced market sentiment. The benchmark 6.48% 2035 bond yield is expected to fluctuate between 6.83% and 6.89%, having settled at 6.8662% on Wednesday. The stability in Brent crude oil prices, hovering around $95 per barrel, is also contributing to this positive outlook. The White House has expressed hope for a resolution to the U.S.-Iran conflict, which has previously disrupted oil flows through the Strait of Hormuz, a vital route for energy supplies. However, the decline in bond yields may face limitations as New Delhi prepares to raise ₹320 billion (approximately $3.43 billion) through upcoming bond sales. Additionally, India's overnight index swap rates are expected to move with a receiving bias, reflecting easing rates from earlier highs.