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Informist, Tuesday, Aug 27, 2024

MUMBAI – Government bond prices and overnight indexed swap rates are seen opening steady on Wednesday due to a lack of significant cues on interest rates, dealers said.

Traders await key economic data such as US growth and inflation data, as well as India's GDP numbers which will be released later this week to lend cues on interest rates. Any sharp movement in US Treasury yields and crude oil prices may also lend cues at the opening.

On Wednesday, the one-day call money rate may open near the Reserve Bank of India's repo rate of 6.50% due to strong demand for funds from banks amid early trading hours.

GOVERNMENT BONDS

On Wednesday, gilt prices may open steady due to a lack of significant triggers, dealers said. Traders look ahead to US growth and inflation data, as well as India's GDP release on Friday, for cues on interest rates.

Foreign fund inflows are likely to continue due to India's inclusion in JP Morgan's Emerging Market Index Suite, a 10-month process that started on Jun 28. Any uptick in yields may also prompt purchases by domestic banks, which will have to maintain larger buffers of liquid assets such as government securities due to an impending tightening of the liquidity coverage ratio guidelines.

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 6.83-6.89% during the day. Today, the bond closed at 101.65 rupees, or 6.86% yield.

OIS RATES

On Wednesday, swap rates may open steady due to a lack of triggers, dealers said. Traders look ahead to US growth and inflation data, as well as India's GDP release on Friday, for cues on interest rates.

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 6.43-6.58% and in the five-year segment at 5.95-6.18%.

Today, the one-year swap rate ended at 6.49% and the five-year swap ended at 6.07%.

CALL

On Wednesday, the one-day call money rate may open near the RBI's repo rate of 6.50% due to strong demand for funds from banks amid early trading hours. During the day, the call rate is seen at 6.20-6.80%, dealers said. Today, the one-day call money rate ended at 5.75%.

RBI AUCTION

--RBI to auction 80 bln rupees of 91-day T-bills on Wednesday 

--RBI to auction 60 bln rupees of 182-day T-bills on Wednesday 

--RBI to auction 60 bln rupees of 364-day T-bills on Wednesday

LIQUIDITY

--Total net outflows of 301.22 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

--56.81 bln rupees as coupon on 7.26%, 2029 gilt

--4.48 bln rupees as coupon on state bonds

* Outflows

--362.50 bln rupees as payment on state loans

End

Reported by Cassandra Carvalho

Edited by Akul Nishant Akhoury

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