More Stories

Informist, Monday, Sep 23, 2024

MUMBAI – Government bond prices may open a tad down on Tuesday ahead of the 344-bln-rupee state bond auction. Gilts and swaps may take cues from US flash Manufacturing Purchasing Managers' Index. In data released after market hours, the flash manufacturing PMI printed at 47.0 from 47.9 final in August, and below a 48.6 forecast by Market News International.

Flash Services Purchasing Managers' Index slightly beat the forecast of 55.2, but fell to 55.4 in September from a final reading of 55.7 in August. A Purchasing Managers' Index above 50 denotes expansion in activity, while a print below 50 indicates contraction.

Any sharp movement in US Treasury yields and crude oil prices may also lend cues when the markets open.

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.

BONDS

On Tuesday, gilts are seen opening slightly down ahead of 344 bln rupees worth of auction of state bonds. Traders will look forward to the results of the auction for the market's appetite in a week of heavy bond supply, dealers said. 

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 6.74-6.80%. Today, the bond closed at 102.30 rupees, or 6.77% yield.

OIS RATES

OIS rates may open steady on Tuesday after US flash PMI data was mixed, which may not change US rate cut expectations much, dealers said. 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 closed at 6.39% and the five-year at 6.01%.

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 5.75%.

RBI AUCTION

--12 states to raise 344.00 bln rupees via bond sale

LIQUIDITY

--Total net inflows of 124.72 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

--29.28 bln rupees as coupon on 8.20%, 2025 gilt

--14.44 bln rupees as coupon on state bonds

--81.00 bln rupees as redemption of state bonds

* Outflows

--500.07 bln rupees as reversal of overnight variable rate repo tender

End

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

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.