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Informist, Thursday, Dec. 26, 2024

NEW DELHI – Government bond prices may open steady on caution ahead of the weekly gilt auction at 1030-1130 IST on Friday, dealers said. The government will sell INR 100 billion of a new 2031 bond, INR 120 billion of the 6.92%, 2039 bond, and INR 100 billion of the 7.09%, 2054 bond at the auction.

Overnight indexed swap rates may take cues on Friday from the movement in US Treasury yields. After market hours, data shows US initial unemployment claims for the week ended Saturday were 219,000, against 225,000 expected in a Dow Jones poll.

Geopolitical developments and crude oil price movements may impact bond prices and swap rates. Several traders are on leave between Christmas and the New Year, which may keep volumes muted in both markets.

On Friday, the three-day call money rate may open above the repo rate of 6.50% due to the demand for funds from banks.

GOVERNMENT BONDS

On Friday, gilts may open steady ahead of the INR 320 billion auction at 1030-1130 IST, dealers said. Lacklustre volumes are expected for the auction day as several dealers are on leave between Christmas and the New Year.

Prices of government bonds may take cues from the movement in US Treasury yields. The weakening domestic currency--the rupee fell to a record low against the dollar for the third straight day on Thursday--may weigh on demand on gilts from foreign investors. Activity from foreign banks and offshore investors is seen limited until the new year, dealers said.

The yield on the 6.79%, 2034 bond is seen at 6.74-6.82%. On Thursday, the 10-year benchmark bond settled at INR 100.04, or 6.78% yield.

OIS RATES

On Friday, swap rates will take cues from the movement in US yields on lack of domestic cues, dealers said. Activity from foreign banks and foreign portfolio investors is expected to be muted as they close their accounts at the end of the year.

The swap rate in the one-year segment is seen at 6.45-6.65% and in the five-year segment at 6.15-6.30%. On Thursday, the one-year swap rate ended at 6.53% and the five-year swap rate closed at 6.23%.

CALL

On Friday, the three-day call money rate may open above the repo rate of 6.50% due to the demand for funds from banks. During the day, the call rate is seen in a range of 6.00-6.80%, dealers said. On Thursday, the one-day call rate ended at 6.65%.

RBI AUCTION

--Govt to auction three gilts worth INR 320 billion

--RBI to conduct a 14-day, INR 1.5-trillion variable rate repo auction

LIQUIDITY

--Total net outflows of INR 344.88 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 16.74 billion as coupon on state bonds

* Outflows

--INR 205.00 billion as payment for 91-day T-bill

--INR 80.00 billion as payment for 182-day T-bill

--INR 76.62 billion as payment for 364-day T-bill

--INR 750.04 billion as reversal of 14-day variable rate repo

--INR 1.50 trillion as reversal of 7-day variable rate repo

--INR 362.75 billion as reversal of 4-day variable rate repo

--INR 379.53 billion as reversal of 3-day variable rate repo

End

Reported by Sachi Pandey

Edited by Akul Nishant Akhoury

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