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Informist, Friday, Nov. 29, 2024

MUMBAI – On Saturday, the two-day call money rate may open below the Reserve Bank of India's repo rate of 6.50% due to low demand for funds as banks have already met regulatory requirements. As is usually the case on Saturdays, trade volume is expected to be low.

During the day, the call rate is seen in a range of 6.00-6.60%, dealers said. Friday, the three-day call rate ended at 6.70%.

Government bonds and overnight indexed swap rates are not traded Saturday. Monday, gilts, swap rates may open steady, dealers said. Traders may continue to bet on the timeline of a rate cut in India after lower-than-expected GDP data for the quarter ended September, dealers added. Gilts and swap rates will also take cues from global markets such as the movement of US yields and crude oil prices. The geopolitical developments in West Asia and Eastern Europe will also be keenly tracked. 

GOVERNMENT BONDS

The gilt market is shut on Saturdays. Monday, bond prices are likely to open steady, dealers said. Traders expect bond prices to consolidate gains following India's GDP growth slowing sharply in Jul-Sept. The bond market's focus will be on the RBI's possible action at the MPC meeting next week. The outcome of the meeting will be announced on Dec. 6.

Any escalation in the conflicts in West Asia and Russia-Ukraine may negatively impact gilt prices at the market opening. The movement of US yields and crude oil prices could also lend cues to bond prices.

The yield on the 6.79%, 2034 bond is seen at 6.71-6.77% Monday. The yield on the 7.10%, 2034 bond is seen at 6.74-6.80%. On Friday, the 6.79%, 2034 bond ended at INR 100.33, or 6.74% yield, and the 7.10%, 2034 bond closed at INR 102.22, or 6.77% yield.

OIS RATES

Money markets will be closed on Saturday. The market remains divisive on the timeline of rate cuts on the domestic front. While a majority of traders now expect the RBI's rate setting panel to cut rates in December, a few still expect rate cuts to happen in February due to sticky inflation, dealers said. 

The swap rate in the one-year segment is seen at 6.35-6.47% and in the five-year segment at 5.98-6.10%. On Friday, the one-year swap rate ended at 6.36% and the five-year swap rate closed at 6.04%. 

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 12.13 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 12.13 billion as coupon on state bonds

* Outflows

--Nil

End

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

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

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