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Informist, Friday, Oct. 25, 2024

MUMBAI – On Monday, government bonds and overnight indexed swap rates may take cues from the movement in US Treasury yields, dealers said. Money markets are shut on Saturday.

Trading volumes in money markets may be affected next week because of Diwali, dealers said. Traders will also watch for any cues on the outcome of the US presidential election. Gilts and swap rates may also take cues from movement in crude oil prices and geopolitical developments in West Asia, dealers said.

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

GOVERNMENT BONDS

The gilt market is shut on Saturday. On Monday, trade volumes are expected to be muted, which will continue through the week, with Diwali scheduled on Nov. 1 as traders would be on leave for the festival.

"I hope that US yields help, I think we can see a rally next week, since there's been so much selling pressure this week, and still everyone is short in the market," a dealer at a private bank said.

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.81-6.88%, and that on the 6.79%, 2034 bond is seen at 6.77-6.83% on Monday. On Friday, the 7.10% 2034 bond closed at INR 101.72, or 6.85% yield, while the 6.79%, 2034 bond closed at INR 99.89 or 6.80%.

OIS RATES

Overnight indexed swaps are not traded Saturday. On Monday, traders may closely watch for further cues on the outcome of the US elections, dealers said.

The swap rate in the one-year segment is seen at 6.45-6.62% and in the five-year segment at 6.15-6.35%. On Friday, the one-year swap rate ended at 6.58% and the five-year swap rate closed at 6.29%.

CALL

Money markets are shut Saturday. On Monday, the one-day call money rate may open around the RBI's repo rate of 6.50% because of demand for funds from banks early in the day for reserve requirements. During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. On Friday, the three-day call rate ended at 5.95%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net outflows of INR 254.46 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 38.97 billion as coupon on 7.72%, 2055 gilt on Saturday

--INR 8.02 billion as coupon on state bonds on Saturday

--INR 9.30 billion as coupon on state bonds on Sunday

--INR 9.25 billion as coupon on state bonds on Monday

* Outflows

--INR 320.00 billion as payment for gilts on Monday

End

Edited by Ashish Shirke

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