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Informist, Tuesday, Nov. 26, 2024

MUMBAI – On Wednesday, government bond prices and overnight indexed swap rates may take cues from the overnight movement in the US Treasury yields after the release of the minutes of the Federal Open Market Committee's November meeting, dealers said. India's GDP data for Jul-Sept, due at 1600 IST Friday, will also be tracked as it is the next domestic trigger to gauge the pace and quantum of interest rate cuts by the Reserve Bank of India's Monetary Policy Committee, before its December meeting.

Traders will be watchful of a slew of key economic data due in the US Wednesday. US Jul-Sept second estimate of GDP will be published at 1800 IST and personal consumption expenditure data for October, the Federal Reserve's preferred inflation gauge, will be released at 2030 IST. 

Domestic traders will look out for further news on geopolitical tensions, both in the Russia-Ukraine conflict and in West Asia, dealers said. The movement of crude oil prices may also lend cues to gilt prices at the open, dealers said.

On Wednesday, 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 reserve requirements.

GOVERNMENT BONDS

Wednesday, the market may take cues from the Federal Open Market Committee's November meeting minutes, due early in the day, dealers said. Even though nothing surprising is expected out of the minutes, the market may still pay heed to the comments from Fed officials, dealers said. 

The yield on the 6.79%, 2034 bond is seen at 6.79-6.86% on Wednesday. The yield on the 7.10%, 2034 bond is seen at 6.80-6.89%. On Tuesday, the 6.79%, 2034 bond ended at INR 99.73, or 6.83% yield, and the 7.10%, 2034 bond closed at INR 101.66, or 6.86% yield.

OIS RATES

On Wednesday, swap rates may take cues from the movement in the US Treasury yields after the release of the FOMC's November meeting minutes early Wednesday. The FOMC minutes and the personal consumption expenditures data may lead to some volatility in swaps during the week, though the impact may be limited as activity by foreign banks in Indian markets has decreased near the year-end, dealers said.

On the domestic front, India's GDP numbers for the September quarter will be looked at for cues on the likely trajectory of the domestic rate-cut cycle. The swap rate in the one-year segment is seen at 6.51-6.57% and in the five-year segment at 6.19-6.25%. On Tuesday, the one-year swap rate closed at 6.54% and the five-year swap closed at 6.22%. 

CALL

On Wednesday, 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 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 6.65%.

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 296.05 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 5.53 billion as coupon on state bonds

--INR 6.32 billion as coupon on 7.02%, 2027 gilt

* Outflows

--INR 307.90 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 Akul Nishant Akhoury

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