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Informist, Tuesday, Oct. 22, 2024

MUMBAI – On Wednesday, government bonds and overnight indexed swap rates may take cues from the overnight movement of US Treasury yields and crude oil prices, dealers said. Traders may be cautious in taking large bets ahead of the release of the minutes of the Reserve Bank of India Monetary Policy Committee's October meeting, due after market hours.

Comments from the new external members of the committee – Ram Singh, Saugata Bhattacharya, and Nagesh Kumar – will be key in setting the market's expectations from the panel, dealers said. The developments in the conflict in West Asia will be keenly tracked by traders in both markets. 

On Wednesday, the one-day call money rate may open around the RBI's repo rate of 6.50% because of demand for funds from banks in early trade for reserve requirements.

GOVERNMENT BONDS

On Wednesday, gilts may take cues from the movement of US yields and crude oil prices at the open, dealers said. 

RBI Governor Shaktikanta Das' comments on Friday, about rate cuts being premature and risky, have set the tone for traders' expectations from other RBI members. However, the minutes will offer the first insight into new members Ram Singh, Saugata Bhattacharya, and Nagesh Kumar's interest rate views, dealers said. Kumar voted for a 25-basis-point rate cut at his first meeting as an external member of the panel. Flash October purchasing managers' data for the US and India are also due this week.

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.79-6.86%, while that on the 6.79%, 2034 bond is seen at 6.74-6.82%. On Tuesday, the 10-year benchmark, 7.10%, 2034 bond closed at INR 101.91, or 6.82% yield, and the new 10-year 6.79%, 2034 bond ended at INR 100.05, or 6.78% yield.

OIS RATES

On Wednesday, OIS rates are seen taking cues from the movement of US Treasury yields and crude oil prices, dealers said. The swap rate in the one-year segment is seen at 6.45-6.62% and in the five-year segment at 6.12-6.30%. On Tuesday, the one-year swap rate closed at 6.55% and the five-year swap closed at 6.26%. 

CALL

On Wednesday, the one-day call money rate may open around the RBI's repo rate of 6.50% because of demand for funds from banks in early trade for reserve requirements. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. On Tuesday, the one-day call rate ended at 5.75%.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 70 billion

--RBI to auction 182-day T-bills worth INR 60 billion

--RBI to auction 364-day T-bills worth INR 60 billion

LIQUIDITY

--Total net outflows of INR 34.15 billion. Calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repo.

* Inflows

--INR 27.64 billion as coupon on 7.37%, 2028 gilt

--INR 19.21 billion as coupon on state bonds 

* Outflows

--INR 81.00 billion as payment on state bonds

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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