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Informist, Thursday, Nov. 21, 2024

MUMBAI – Overnight movement in US Treasury yields after weekly unemployment claims data at 1900 IST may lend cues to government bond prices and overnight indexed swap rates at open on Friday, dealers said. Further escalation in the Russia-Ukraine conflict overnight would be closely watched, particularly with crude oil prices rising near the end of trade.

On the domestic front, India's GDP numbers for the quarter ended September, due at 1600 IST on Nov. 29, will be looked at for cues on the onset of the rate cut cycle by the Monetary Policy Committee. Traders widely expect a print lower than the Reserve Bank of India's 7% forecast.

The three-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.

GOVERNMENT BONDS

On Friday, prices may not be volatile due to caution ahead of the weekly gilt auction at 1030-1130 IST. The government will sell INR 220 billion worth of the 6.79%, 2034 gilt and INR 100 billion of a new 50-year paper. Demand at the debt sale is seen modest, with investors likely to hold off on large gilt purchases amid uncertainties overseas, dealers said. 

The Jul-Sept GDP print next week has been in focus as the next domestic trigger to gauge India's pace and quantum of India's interest rate cuts. This will likely continue on Friday. Traders expect a print lower than the RBI's 7% forecast, which may spur prices, dealers said. 

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.83-6.90% on Friday. The yield on the 6.79%, 2034 bond is seen at 6.80-6.86%. On Thursday, the 7.10%, 2034 bond closed at INR 101.62, or 6.86% yield, and the 6.79%, 2034 bond ended at INR 99.69, or 6.83% yield.

OIS RATES

On Friday, swap rates may take cues from weekly initial jobless claims data. The market may also take cues from overnight movement in US yields and crude oil prices.

Traders also await the US November flash manufacturing and services purchasing managers' index data, due post market hours on Friday, for cues on the US rate cut trajectory. On Thursday, the one-year swap rate closed at 6.54% and the five-year swap closed at 6.25%. 

CALL

On Friday, the three-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 Thursday, the one-day call rate ended at 6.00%.

RBI AUCTION

--Government to auction two gilts worth INR 320 billion on Friday

LIQUIDITY

--Total net outflows of INR 176.00 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 60.00 billion on redemption of 182-day Treasury bills 

--INR 23.00 billion as coupon on state bonds

--INR 287.20 billion on redemption of 4-day variable rate reverse repo

--INR 225.65 billion on redemption of 3-day variable rate reverse repo

* Outflows

--INR 124.00 billion on redemption of 91-day T-bills

--INR 74.00 billion on redemption of 182-day T-bills 

--INR 61.00 billion on redemption of 364-day T-bills 

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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