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Informist, Monday, Sep 9, 2024

MUMBAI – Prices of government bonds and overnight indexed swap rates are seen opening steady ahead of the US and India CPI readings later this week, dealers said. Traders will take cues from the data for signs of the quantum of the rate cut in the US, and the possibility of a policy stance change in India.

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

On Tuesday, the one-day call money rate may open near the Reserve Bank of India's repo rate due to demand for funds from banks in early trade to meet the reserve requirements.

GOVERNMENT BONDS

On Tuesday, gilt prices may open steady due to caution ahead of the US and India CPI readings later this week, dealers said.

Foreign fund inflows are likely to continue due to the ongoing JP Morgan index inclusion. There is also firm demand expected from 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. Today, the bond closed at 101.70 rupees, or 6.85% yield.

OIS RATES

On Tuesday, swap rates are seen opening steady as traders await inflation data for August in India and the US this week. These are likely to provide interest rate cues in both economies, with traders having high expectations of imminent rate cuts, dealers said.

The swap rate in the one-year segment is seen at 6.43-6.53% and in the five-year segment at 6.00-6.12%. Today, the one-year swap rate closed at 6.46% and the five-year at 6.06%.

CALL

On Tuesday, the one-day call money rate may open near the RBI's repo rate due to demand for funds from banks in early trade to meet the reserve requirements. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. Today, the one-day call money rate ended at 6.40%.

RBI AUCTION

--7 states to raise 137.90 bln rupees via bond sale

LIQUIDITY

--Total net inflows of 103.36 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

--11.31 bln rupees as coupon on state bonds 

--92.05 bln rupees as redemption of state bonds 

--483.95 bln rupees as redemption on 4-day variable rate reverse repo 

* Outflows

--Nil

End

Reported by Srijita Bose

Edited by Vidhi Verma

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