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Informist, Wednesday, Dec. 11, 2024

MUMBAI – Government bond prices may open steady Thursday as traders will be cautious ahead of India's CPI data for November, which is due at 1600 IST. Overnight indexed swaps may take cues from the US yields at open, while also eyeing domestic data on inflation.

Trade volume in the gilts market is expected to remain muted in the early hours, and will likely pick up once the inflation data is released. Traders will also look out for further news on geopolitical tensions, dealers said. Any movement in crude oil prices may also lend cues.

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

GOVERNMENT BONDS

On Thursday, gilts are likely to open steady ahead of India's CPI data for November, dealers said. Trade volumes will likely be muted until then. Prices may be volatile in the one hour of trading after the data is released. 

Gilt prices will take cues from the overnight movement of US yields. After the US CPI data for November was released, showing consumer prices rose 2.7% on year and core CPI was up 3.3% on year, US yields softened. Any developments in West Asia and in the Russia-Ukraine war will also impact gilt prices at open.

The yield on the 6.79%, 2034 bond is seen at 6.61-6.81% Thursday. On Wednesday, the 10-year benchmark 6.79%, 2034 gilt settled at INR 100.51, or 6.72% yield.

OIS RATES

Thursday, swap rates will take cues from the movement in US yields after the release of US CPI data for November, dealers said. Any reaction to global cues may be offset by caution ahead of India's CPI inflation data for November, due during market hours Thursday.

The swap rate in the one-year segment is seen at 6.30-6.50% and in the five-year segment at 5.90-6.10%. On Wednesday, the one-year swap rate ended at 6.40% and the five-year swap rate closed at 6.02%.

CALL

On Thursday, 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 Wednesday, the one-day call ended at 6.75%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 128.06 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 163.00 billion on redemption of 91-day T-bills

--INR 50.00 billion on redemption of 182-day T-bills

--INR 90.24 billion on redemption of 364-day T-bills

--INR 7.52 billion as coupon on state bonds

--INR 40.52 billion as coupon on 8.83%, 2041 gilt

--INR 87.00 billion as coupon on 7.25%, 2063 gilt

* Outflows

--INR 165.50 billion as payment on 91-day T-bills

--INR 72.00 billion as payment on 182-day T-bills

--INR 72.72 billion as payment on 364-day T-bills

End

Reported by Vidhushi RajPurohit

Edited by Ashish Shirke

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