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Informist, Monday, Nov. 18, 2024

MUMBAI – On Tuesday, prices of government bonds and overnight indexed swap rates may take opening cues from overnight movement in US yields and crude oil prices. Some traders may be on leave as money markets will be shut on Wednesday owing to Maharashtra state assembly elections, which may affect volumes of trade, dealers said.

Traders are likely to be cautious ahead of India's GDP numbers for the quarter ended September, due at 1600 IST on Nov. 29. The data will be looked at for cues on the onset of the rate cut cycle by the MPC.

The two-day call money rate may open around the Reserve Bank of India's repo rate of 6.50% on Tuesday due to demand for funds from banks in early trading hours to meet reserve requirements.

GOVERNMENT BONDS

Prices of government bonds may take opening cues from overnight movement in US yields and crude oil prices on Tuesday. Traders will remain cautious ahead of a INR 93.49-billion state bonds auction at 1030-1130 IST Tuesday, with demand at the debt sale likely to lend cues later in the day.

Prices could remain within a thin range due to lack of fresh cues on interest rates, and caution ahead of key data releases next week. 

Trade volume may be low, with prices seen confined to a narrow band for most part of the day. Some traders may be inclined to buy bonds on the view that a weaker-than-expected domestic GDP print next week could set the stage for rate cuts by the RBI.

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.82-6.90% on Tuesday. The yield on the 6.79%, 2034 bond is seen at 6.78-6.86%. On Monday, the 7.10%, 2034 bond closed at INR 101.64, or 6.86% yield, and the 6.79%, 2034 bond ended at INR 99.79, or 6.82% yield.

OIS RATES

On Tuesday, swap rates may take cues from the overnight movement in US yields and crude oil prices. Some traders may be on leave as money markets are shut on Wednesday owing to Maharashtra state assembly elections, which may affect volumes of trade, dealers said.

Meanwhile, traders await the US November flash manufacturing and services purchasing managers' index data, due after market hours on Friday, for cues on the US rate-cut trajectory. 

The swap rate in the one-year segment is seen at 6.53-6.59% and in the five-year segment at 6.27-6.33%. On Monday, the one-year swap rate closed at 6.56% and the five-year swap closed at 6.30%. 

CALL

On Tuesday, the two-day call money rate may open around the RBI's repo rate of 6.50% due to demand for funds from banks in early trading hours to meet the reserve requirements.

During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. On Monday, the one-day call rate ended at 5.75%.

RBI AUCTION

--6 states to raise INR 93.49 billion via bond sale on Tuesday

LIQUIDITY

--Total net inflows of INR 5.44 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 5.44 billion as coupon on state bonds

--INR 454.80 billion on redemption of 1-day variable rate reverse repo

* Outflows

--Nil

End

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

Reported by Srijita Bose

Edited by Avishek Dutta

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