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Informist, Friday, Mar. 21, 2025

MUMBAI – Gilts and swaps on Monday may take cues from the movement of US Treasury yields. Traders may also continue to bet on the possibility of further domestic rate cuts and a stance change to 'accommodative' by the Reserve Bank of India's Monetary Policy Committee in April. Gilts and swaps are not traded Saturday.

Traders may also assess 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.

On Monday, the one-day call rate may open above the repo rate and stay elevated as banks will borrow to cover outflows for Goods and Services Tax payments. During the day, the call rate is seen in the range of 5.80-6.50% and the triparty repo rate in the range of 5.75-6.40%.

GOVERNMENT BONDS

Gilts are not traded Saturday. On Monday, gilt prices may continue to rise on rate cut bets. Traders will also await any announcement by the RBI on liquidity, and may also take cues from overnight lending rates.

Traders may also take cues from the notified quantum for Tuesday's state bond auction. Eighteen states will raise INR 566.21 billion via bonds Tuesday, slightly higher than the indicated amount of INR 540.65 billion. Traders also await the central government's borrowing plan for Apr-Sept and states' borrowing plan for Apr-Jun, due at the end of March. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.60-6.65% during the day. On Friday, the bond settled at INR 101.15, or 6.62% yield.

OIS RATES

Swaps are not traded Saturday. On Monday, swap rates may take cues from the movement in US Treasury yields. Swaps may also react to the movement in government bonds during the day, dealers said. Short-term swaps will closely track the movement in the overnight Mumbai Interbank Offered Rate, with the RBI's proactive liquidity measures seen keeping the rate below the Marginal Standing Facility rate of 6.50% for the rest of March, dealers said.

The one-year swap rate is seen at 6.00-6.13% and the five-year rate at 5.80-5.95%. On Friday, the one-year swap rate ended at 6.09% and the five-year swap rate closed at 5.88%.

CALL

On Monday, the one-day call rate may open above the repo rate and stay elevated as banks will borrow to cover outflows for GST payments. During the day, the call rate is seen in the range of 5.80-6.50% and the triparty repo rate in the range of 5.75-6.40%. On Friday, the 3-day call rate ended at 5.80%.

RBI AUCTION

--RBI to hold overnight VRR auction for INR 1.5 trillion 1000-1030 IST on Monday 

LIQUIDITY

--Total net inflows of INR 104.69 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 13.58 billion as coupon on state bonds on Saturday

--INR 34.75 billion as coupon on 2033 Floating Rate Bond on Saturday

--INR 14.61 billion as coupon on state bonds on Sunday

--INR 18.59 billion as coupon on state bonds on Monday

--INR 23.16 billion as coupon on 8.20%, 2025 gilt on Monday

* Outflows

--INR 965.81 billion as reversal of 3-day variable rate repo tender

End

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

Reported by Cassandra Carvalho

Edited by Tanima Banerjee

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