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Informist, Friday, Dec. 6, 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 their 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 6.10-6.50%, dealers said. Friday, the three-day call rate ended at 6.24%.

Government bonds and overnight indexed swap rates are not traded on Saturday. On Monday, gilts, swap rates may likely take cues from the movement of US Treasury yields, dealers said. The geopolitical developments in West Asia and Eastern Europe will also be keenly tracked.

GOVERNMENT BONDS

The gilt market is shut on Saturdays. On Monday, bond prices are likely to take cues from the movement of US Treasury yields after the US non-farm payrolls data, dealers said.

After Friday's fall in prices due to the Monetary Policy Committee outcome, dealers expect foreign investors to sell gilts more next week. Traders also await any news on the extension of RBI Governor Das' tenure. His term ends on Tuesday, and the announcement on either an extension of his term or appointment of a successor is expected this week.

The yield on the 6.79%, 2034 bond is seen at 6.72-6.80% Monday. On Friday, the 10-year benchmark bond settled at INR 100.31, or 6.74% yield.

OIS RATES

Swaps are not traded Saturday. On Monday, swap rates may take cues from the movement of US Treasury yields after the US November employment report. US yields may also take cues from the comments of US Federal Reserve Bank of Cleveland President Beth Hammack.

Any news on the extension of tenure of Das or his successor will also lend cues to swaps. Das' term ends Tuesday, and most traders expect an extension of his tenure. However, any other candidate appointed for the position may have a softer stance on easing monetary policy which would be good news for traders, dealers said.

The movement of crude oil prices will also be tracked, dealers said. The swap rate in the one-year segment is seen at 6.40-6.48% and in the five-year segment at 6.04-6.12%. On Friday, the one-year swap rate ended at 6.44% and the five-year swap rate closed at 6.08%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 76.95 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 7.72 billion as coupon on state bonds

--INR 32.11 billion as coupon on 2031 forward rate bond

--INR 37.12 billion as coupon on 8.33%, 2036 gilt

* Outflows

--Nil

End

Reported by Vidhushi RajPurohit

Edited by Ashish Shirke

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