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Informist, Friday, Nov. 22, 2024

MUMBAI – On Monday, government bond prices and overnight indexed swap rates may take cues from the movement in the US Treasury yields and crude oil prices over the weekend. Money markets are shut Saturday. Any escalation in the Russia-Ukraine war will be tracked for cues, dealers said.

Traders also await the US November flash manufacturing and services purchasing managers' index data, due at 2015 IST, for cues on the US rate cut trajectory. 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 over the onset of the rate cut cycle by the Monetary Policy Committee.

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

GOVERNMENT BONDS

Monday, the movement in US yields may lend cues to gilt prices at the open, dealers said. Developments in the Russia-Ukraine conflict during the weekend would also be closely watched.

US S&P Flash Purchasing Managers' Index for October is due Friday. Dealers, however, said that only a major reaction of the data in US yields could impact gilts on Monday. 

Investors are 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. 

The yield on the 10-year benchmark 7.10%, 2034 bond is seen at 6.83-6.90% on Monday. The yield on the 6.79%, 2034 bond is seen at 6.81-6.88%. On Friday, the 7.10%, 2034 bond closed at INR 101.55, or 6.87% yield, and the 6.79%, 2034 bond ended at INR 99.59, or 6.85% yield.

OIS RATES

On Monday, swap rates may take cues from the movement of US Treasury yields and crude oil prices over the weekend. Any escalation in the Russia-Ukraine war will be tracked for cues, dealers said.

The swap rate in the one-year segment is seen at 6.45-6.63% and in the five-year segment at 6.18-6.33%. On Friday, the one-year swap rate closed at 6.56% and the five-year swap closed at 6.26%. 

CALL

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

RBI AUCTION

--Nil

LIQUIDITY

--Total net outflows of INR 148.75 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 8.74 billion as coupon on state bonds on Saturday

--INR 58.02 billion as coupon on 7.54%, 2036 bond on Saturday

--INR 36.15 billion as coupon on state bonds on Sunday

--INR 32.26 billion as coupon on 8.15%, 2026 bond on Sunday

--INR 6.43 billion as coupon on state bonds on Monday

--INR 29.66 billion as coupon on 7.72%, 2025 bond on Monday

* Outflows

--INR 320.00 billion on payment of gilts on Monday

End

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

Reported by Srijita Bose

Edited by Akul Nishant Akhoury

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