India Money Market Outlook
Gilts, swaps seen taking cues from US yields Tue
This story was originally published at 20:49 IST on 30 December 2024
Register to read our real-time news.Informist, Monday, Dec. 30, 2024
MUMBAI – Government bond prices and overnight indexed swap rates may take cues from US Treasury yields and movement in the Indian rupee against the dollar on Tuesday, dealers said. The trade volume is expected to be low as several traders are on leave ahead of the New Year.
Geopolitical developments and movement in crude oil prices could also impact gilt prices and swap rates at the open.
On Tuesday, the one-day call money rate may open above the repo rate of 6.50% due to the demand for funds from banks.
GOVERNMENT BONDS
On Tuesday, gilt prices may take cues from the US Treasury yields at open, dealers said. Volume is expected to remain muted due to the absence of several traders around the year end. Quarter-end credit demand may keep investment activity of even domestic banks muted, dealers said.
Gilt prices will also track the movement in the Indian rupee against the dollar, after it hit a series of record lows last week. Any major geopolitical developments and movement in crude oil prices could also lend cues to gilt prices at the open.
The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.74-6.81% during the day. On Monday, the 2034 bond settled at INR 100.11, or 6.77% yield.
OIS RATES
On Tuesday, swap rates will take cues from the movement in US yields, dealers said. The pressure on the rupee could also lead to volatility in rates during the day.
Trade volume could be low during the week as several traders are on leave ahead of the New Year. Activity from foreign banks and foreign portfolio investors could also be muted as they close their accounts at the end of the year, dealers said.
Tight liquidity conditions in the banking system may result in upward pressure on short-term swap rates. 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 Monday, the one-year swap rate ended at 6.52% and the five-year swap rate closed at 6.22%.
CALL
On Tuesday, the one-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 Monday, the one-day call rate ended at 6.00%.
RBI AUCTION
--10 states to raise INR 247.29 bln via bond sale Tuesday
LIQUIDITY
--Total net inflows of INR 43.87 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 43.87.billion as coupon on 8.30%, 2042
* Outflows
--Nil
End
Reported by Christina Titus
Edited by Deepshikha Bhardwaj
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
