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Informist, Wednesday, Aug 28, 2024

MUMBAI - Government bond prices and overnight indexed swap rates are seen opening steady on Thursday due to a lack of fresh cues on interest rates, dealers said. Traders will look ahead to US growth, jobs and inflation data and India's GDP this week for cues on interest rates.

India's GDP numbers on Friday may be significant if they surprise on the downside, making the case for quicker rate cuts in India, dealers said. According to an Informist poll, India's GDP growth is likely to have moderated to a five-quarter low of 6.9% in Apr-Jun from 7.8% a quarter ago.

Any sharp movement in US Treasury yields and crude oil prices may also lend cues at the opening.

On Thursday, 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.

GOVERNMENT BONDS

On Thursday, gilt prices may open steady due to a lack of significant triggers, dealers said. Traders may be cautious ahead of US GDP data for Apr-Jun and weekly unemployment claims data, both due after market hours.

India's GDP numbers on Friday may be significant if they throw negative surprises, making the case for quicker rate cuts in India, dealers said. 

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. The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.83-6.89% during the day.

The 10-year benchmark 7.10%, 2034 bond closed at 101.66 rupees, or 6.86% yield, against 101.65 rupees, or 6.86%, the previous day.

OIS RATES

On Thursday, swap rates may open steady due to a lack of triggers, dealers said. Traders look ahead to US growth, jobs and inflation data, as well as India's GDP release, for cues on interest rates. The swap rate in the one-year segment is seen at 6.43-6.58% and in the five-year segment at 6.00-6.18%.

The one-year swap rate ended at 6.48%, against 6.49% on Tuesday. The five-year swap rate ended at 6.06%, against 6.07% the previous trading day.

CALL

On Thursday, 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 in early trading hours. During the day, the call rate is seen at 6.20-6.80%, dealers said. Today, the one-day call ended at 6.25% compared to 5.75% on Tuesday.

LIQUIDITY

--Total net inflows of 5.95 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

-- 55.00 bln rupees on 91-day T-bill

-- 150.00 bln rupees on 182-day T-bill

-- 73.95 bln rupees on 364-day T-bill

-- 9.56 bln rupees as coupon on state bonds

* Outflows

-- 150.00 bln as payment on 91-day T-bill

-- 61.45 bln as payment on 182-day T-bill

-- 71.12 bln as payment on 364-day T-bill

End

Reported by Srijita Bose

Edited by Saji George Titus

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