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Informist, Friday, Sep 20, 2024

MUMBAI – On Saturday, the two-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. Outflows on account of goods and services tax payments are due to begin on Saturday.

During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. Today, the three-day call rate ended at 6.75%.

Overnight indexed swaps and government bonds are not traded on Saturdays. On Monday, gilts may take cues from the gilt switch auction scheduled, and swaps may open steady due to lack of firm cues.

GOVERNMENT BONDS

Gilts are not traded on Saturday. On Monday, government bond prices may open steady. Demand for bonds maturing in over 10 years may take a hit ahead of the monthly gilt switch auction, dealers said. The government will switch eight short-term gilts worth 300 bln rupees with four bonds at 1030-1130 IST.

Foreign fund inflows are likely to continue because of the inclusion of Indian bonds in JP Morgan's emerging market bond index. The subsequent fall in US yields after the Fed's 50-bps cut may increase foreign inflows due to an appealing interest rate differential between the yields of US Treasury notes and Indian gilts.

The movement of crude oil prices may also affect gilt prices. 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 guidelines on liquidity coverage ratio.

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.74-6.82%. Today, the 10-year benchmark ended at 102.34 rupees or 6.76% yield.

OIS RATES

Swaps are not traded on Saturday. OIS rates may open steady on Monday due to a lack of firm domestic and global cues, 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 6.35-6.53% and in the five-year segment at 5.90-6.10%.

Today, the one-year swap rate ended at 6.39%, while the five-year swap rate ended at 6.01%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of 43.22 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

--38.03 bln rupees as coupon on 8.28%, 2027 gilt

--0.63 bln rupees as coupon on 8.33%, 2032 gilt

--4.55 bln rupees as coupon on state bonds

* Outflows

--Nil

End

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

Reported by Cassandra Carvalho

Edited by Manisha Baxla

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