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Informist, Thursday, Nov. 28, 2024

MUMBAI – Government bond prices and overnight indexed swap rates on Friday may open steady ahead of India's GDP data for Jul-Sept, due at 1600 IST, dealers said.

The GDP data for Jul-Sept 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 ahead of its meeting next week. According to an Informist poll, GDP growth is likely to have moderated to a six-quarter low of 6.5% in Jul-Sept.

Domestic traders will look out for further news on geopolitical tensions, both in the Russia-Ukraine conflict and in West Asia, dealers said. Reports on Thursday said Russia attacked Ukraine's energy facilities. Meanwhile, the progress of the ceasefire between Israel and Iran-backed Hezbollah would also be watched, after allegations of violating the ceasefire deal from both parties, dealers said. The movement of crude oil prices and US Treasury yields may also lend cues to swaps and gilts at market open, dealers said.

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

GOVERNMENT BONDS

On Friday, bond prices are seen opening steady ahead of the GDP data and weekly bond auction during market hours. While some traders may place short bets, volumes are likely to be muted until 1600 IST, after which GDP data will lend cues for market direction, dealers said. 

The yield on the 6.79%, 2034 bond is seen at 6.75-6.85% on Friday. The yield on the 7.10%, 2034 bond is seen at 6.78-6.88%. On Thursday, the 6.79%, 2034 bond ended at INR 99.89, or 6.80% yield, and the 7.10%, 2034 bond closed at INR 101.81, or 6.83% yield.

OIS RATES

OIS rates may open steady on Friday ahead of Jul-Sept GDP, dealers said. Intraday bets on the rate cue from the GDP data will likely determine the direction of swap rates. 

The swap rate in the one-year segment is seen at 6.43-6.57% and in the five-year segment at 6.12-6.25%. On Thursday, the one-year swap rate closed at 6.51% and the five-year swap closed at 6.17%. 

CALL

On Friday, the three-day call money rate may open around the RBI's repo rate of 6.50% due to the demand for funds from banks in early trading to meet reserve requirements. During the day, the call rate is seen in a range of 6.00-6.70%, dealers said. On Thursday, the one-day call rate ended at 6.70%.

RBI AUCTION

--Govt to auction three gilts worth INR 300 bln

--RBI to conduct 14-day VRRR auction for INR 250-bln 1030-1100 IST

LIQUIDITY

--Total net inflows of INR 8.75 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 8.75 billion as coupon on state bonds

--INR 84.05 billion on redemption of 15-day variable reverse repo tender

* Outflows

--INR 250.05 billion as reversal of 4-day variable rate repo tender

--INR 250.06 billion as reversal of 3-day variable rate repo tender

--INR 250.08 billion as reversal of overnight variable rate repo tender

End

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

Reported by Cassandra Carvalho

Edited by Saji George Titus

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