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Informist, Thursday, Jul 18, 2024

MUMBAI – Government bond prices are seen opening steady Friday on caution ahead of the weekly gilt auction at 1030-1130 IST. The government will sell 200 bln rupees of the 7.10%, 2034 bond and 110 bln rupees of the 7.46%, 2073 gilt.

Overnight indexed swap rates are seen opening steady due to lack of interest rate cues both on global and domestic front, dealers said. Any sharp movement in US Treasury yields and crude oil prices may also lend cues to gilts and swaps.

On Friday, the three-day call money rate may open near the Reserve Bank of India's repo rate of 6.50% because of the demand for funds from banks early in the day.

GOVERNMENT BONDS

Bond prices are seen opening steady Friday on caution ahead of the weekly gilt auction at 1030-1130 IST. The government will sell 200 bln rupees of the 7.10%, 2034 bond and 110 bln rupees of the 7.46%, 2073 gilt.

RBI Governor Shaktikanta Das is scheduled to speak at an event at 1030 IST on Friday. His comments may also change traders' views on India's interest rate trajectory, and lend cues to gilt prices, dealers said. Except for triggers from these two events, dealers expect bond prices to trade in a narrow band before Finance Minister Nirmala Sitharaman presents the Union Budget in Parliament on Tuesday.

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.94-7.01% during the day. Today, the bond closed at 100.91 rupees, or 6.97% yield.

OIS RATES

Swap rates are seen opening steady on Friday due to lack of domestic and offshore rate cues, dealers said. RBI Governor Das is scheduled to speak at an event at 1030 IST on Friday, which may be a trigger for swap rates.

The swap rate in the one-year segment is seen at 6.65-6.80% and in the five-year segment at 6.27-6.42%. Today, the one-year swap rate settled at 6.70% and the five-year swap ended at 6.28%.

CALL

On Friday, the three-day call money rate may open near the RBI's repo rate of 6.50% because of demand for funds from banks early in the day. However, the rates may ease intraday owing to prevailing surplus liquidity in the banking system.

During the day, the call rate is seen in a range of 6.20-6.75%, dealers said. Today, the one-day call rate ended at 5.75%.

RBI AUCTION

--Govt to sell 310 bln rupees worth of two gilts 

LIQUIDITY

--Total net outflows of 193.39 bln rupees. Calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repos.

* Inflows

--145.00 bln rupees as redemption of 91-day T-bills

--4.44 bln rupees as coupon on 6.83%, 2039 bond

--7.71 bln rupees as coupon on state government securities

--372.20 bln rupees from reversal of four-day variable rate reverse repo

--250.09 bln rupees from reversal of three-day variable rate reverse repo

--250.07 bln rupees from reversal of overnight variable rate reverse repo

--203.53 bln rupees from reversal of overnight variable rate reverse repo

* Outflows

--215.40 bln rupees as payment for 91-day T-bills

--75.00 bln rupees as payment for 182-day T-bills 

--60.14 bln rupees as payment for 364-day T-bills

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Siddhi Chauhan

Edited by Ashish Shirke

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