More Stories

Informist, Tuesday, Mar. 11, 2025

MUMBAI – Government bond prices are likely to remain steady Wednesday ahead of the Reserve Bank of India's open market operation auction to buy gilts worth INR 500 billion, dealers said. Gilt prices and overnight indexed swap rates will also likely remain steady on caution before India's CPI data for February, due at 1600 IST. According to an Informist poll, inflation is expected to fall to a six-month low of 3.9%. A reading of below 4.0% is expected to push up gilt prices as hopes for a 25 basis points repo rate cut in April will be cemented, dealers said.

Gilts and swaps will also track the overnight movement in US Treasury yields. Crude oil prices could also be a trigger for both swaps and gilts if they move significantly, dealers said. A sharp movement of the rupee against the dollar could also provide cues to traders.

On Wednesday, the one-day call rate may open above the repo rate on demand for funds from banks. During the day, the call rate is seen in the range of 5.75-6.40% and the triparty repo rate in 5.75-6.25%.

GOVERNMENT BONDS

On Wednesday, gilt prices are likely to remain steady ahead of the INR 500 billion OMO auction, dealers said. Prices might inch up as some traders will likely build positions before the auction. However, with most of the six bonds in the auction in the held-to-maturity portfolios of banks, trading activity may remain muted, they said. 

Prices will likely remain steady ahead of India's CPI data for February, due at 1600 IST. According to an Informist poll, inflation is seen falling to a six-month low of 3.9% from 4.31% in January. Traders may also take cues from the movement in US Treasury yields at opening.

Market participants will also track and assess any developments related to the US tariff policy and the rupee's movement against the dollar, dealers said. Crude oil prices could also be a trigger if they move significantly. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.67-6.75% during the day. On Tuesday, the bond settled at INR 100.67, or 6.69% yield.

OIS RATES

On Wednesday, swap rates may take cues from the movement in government bonds and US Treasury yields at open. There may be caution ahead of the release of the CPI data for February, dealers said. 

Unless the domestic inflation data springs a surprise, traders may remain on the sidelines awaiting US CPI data for February, due post-market hours Wednesday. Market participants will assess any statements by US President Donald Trump on tariffs and their potential impact on global trade.

Short-term swaps may fall more during the day due to the RBI's liquidity measures and tracking the movement in overnight MIBOR--the floating leg of the OIS contract. The RBI will infuse INR 500 billion through an open market operation auction to buy gilts Wednesday. The one-year swap rate is seen at 6.15-6.23%, and the five-year rate is seen at 5.95-6.03%. On Tuesday, the one-year swap rate ended at 6.18% and the five-year swap rate closed at 5.99%.

CALL

On Wednesday, the one-day call rate may open above the repo rate on demand for funds from banks. During the day, the call rate is seen in the range of 5.75-6.40% and the triparty repo rate in 5.75-6.25%. On Tuesday, the one-day call rate ended at 5.80%.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 140 bln 

--RBI to auction 182-day T-bills worth INR 120 bln 

--RBI to auction 364-day T-bills worth INR 70 bln

--RBI to buy 6 gilts worth INR 500 billion via OMO auction at 1030-1130 IST

--RBI to hold overnight VRR auction for INR 500 billion 1000-1030 IST 

LIQUIDITY

--Total net outflows of INR 394.55 billion. The calculation of flows does not take into account the redemption of the standing deposit facility and scheduled variable rate repo and reverse repo operations.

* Inflows

--INR 59.60 billion as coupon 7.36%, 2052 gilt

--INR 41.06 billion as coupon on state bonds

* Outflows
--INR 495.22 billion on payment of state bonds

--INR 157.91 billion as reversal of overnight variable rate repo tender

End

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

Reported by Vidhushi RajPurohit

Edited by Saji George Titus

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. 2025. All rights reserved.