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Informist, Friday, Aug 9, 2024

MUMBAI – Government bond prices are seen opening steady Monday ahead of the domestic CPI inflation print at 1730 IST, dealers said. Headline CPI inflation is seen falling to 3.70% from 5.08% in June, according to an Informist poll. This would be the first time since November 2019 that headline inflation is below the RBI's medium-term 4% target. Traders are prepared for a higher CPI inflation print after the central bank raised its headline CPI projection by 60 bps to 4.4% at the monetary policy review Thursday.

Swap rates may open steady due to lack of firm global and domestic cues. CPI data in both the US and India is scheduled next week, which are seen as the next important cues for the market, dealers said. 

The one-day call money rate may open near the RBI's repo rate of 6.50% because of demand for funds from banks in early trade.

GOVERNMENT BONDS

Gilts are not traded Saturdays. On Monday, bond prices may open steady on caution ahead of the domestic CPI inflation print at 1730 IST, dealers said.

Headline CPI inflation is seen falling to 3.70% from 5.08% in June, according to an Informist poll. This would be the first time since November 2019 that headline inflation is below the RBI's medium-term 4% target. Traders are prepared for a higher CPI inflation print after the central bank raised its headline CPI projection by 60 bps to 4.4% at the monetary policy review Thursday.

Any sharp movement in US Treasury yields and crude oil prices may also lend cues at the opening. The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.80-6.95% during the day.

OIS RATES

Swaps are not traded Saturday. On Monday, swap rates may open steady owing to a lack of firm global and domestic cues. CPI data in both the US and India are due out next week, which are seen as the next important cues for the market, dealers said. 

Any sharp movement in US Treasury yields and crude oil prices may also lend cues at the opening. The swap rate in the one-year segment is seen at 6.43-6.63% and in the five-year segment at 6.00-6.25%.

CALL

On Monday, the one-day call money rate may open near the RBI's repo rate of 6.50% because of demand for funds from banks in early trade. However, the rates may ease intraday owing to surplus liquidity in the banking system. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said.

RBI AUCTION

--

LIQUIDITY

--Total net inflows of 175.51 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

--7.65 bln rupees as coupon on state bonds

--25.50 bln rupees as redemption of state bonds

--452.36 bln rupees as reversal of three-day variable rate reverse repo

* Outflows

--310.00 bln rupees as payment for gilts

End

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

Reported by Kabir Sharma

Edited by Rajeev Pai

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