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Informist, Tuesday, Dec. 10, 2024

MUMBAI – Government bonds and overnight indexed swaps may track the movement in the US yields ahead of the US CPI data, due after Indian market hours on Wednesday. Gilt prices are likely to maintain an upward momentum as rate cut bets crystallise around February.  

Traders are placing bets on a rate cut by the Monetary Policy Committee in February after the appointment of Revenue Secretary Sanjay Malhotra as the new governor of the Reserve Bank of India. Comments from Malhotra on Wednesday, as he takes as RBI governor, may lend cues to gilt prices, dealers said. Meanwhile, traders will also look out for global developments and the movement of crude oil prices.

On Wednesday, the one-day call money rate may open near the RBI's marginal standing facility rate of 6.75% due to demand for funds from banks.

GOVERNMENT BONDS

On Wednesday, gilts may open steady on caution ahead of the India CPI data Thursday. US CPI data post market hours Wednesday may also prevent a sharp movement in prices, dealers said.

Any developments in West Asia and the Russia-Ukraine war may also impact gilt prices at open. The yield on the 6.79%, 2034 bond is seen at 6.67-6.75% Wednesday. On Tuesday, the 10-year benchmark bond settled at INR 100.58, or 6.71% yield.

OIS RATES

On Wednesday, swap rates will take cues from the movement in US yields before the US CPI data is released post market hours, dealers said. Domestic traders will also look out for further news on geopolitical tensions, dealers said. 

The US CPI data for November is expected to show a rise in annual headline inflation to 2.7% from 2.6%, while core CPI is expected to remain steady at 3.3%, according to a poll by FX Street. The swap rate in the one-year segment is seen at 6.32-6.42% and in the five-year segment at 5.93-6.08%. On Tuesday, the one-year swap rate ended at 6.38% and the five-year swap rate closed at 5.99%.

CALL

On Wednesday, the one-day call money rate may open near the RBI's marginal standing facility rate of 6.75% due to demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.80%, dealers said. On Tuesday, the one-day call rate ended at 6.74%.

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 108.33 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 3.86 billion as coupon on state bonds

--INR 1.81 billion as coupon on 7.24%, 2033 green bond

* Outflows

--INR 114.00 billion payment on state bonds

End

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

Reported by Vidhushi RajPurohit

Edited by Akul Nishant Akhoury

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