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Informist, Saturday, Apr. 5, 2025

MUMBAI – Government bond prices may open steady on Monday as the much-awaited Reserve Bank of India's Monetary Policy Committee three-day meeting begins, dealers said. Overnight indexed swap rates and gilts may also take cues from the movement in US Treasury yields at open.

US government data released 1900 IST Friday showed non-farm payrolls rose 228,000 in March, against a Dow Jones consensus estimate of 140,000. However, the unemployment rate rose to 4.2% from 4.1% in February.

Crude oil prices could also be a trigger for gilts and swaps after falling sharply this week, dealers said. A sharp movement in the rupee against the dollar may also provide cues. 

On Monday, the one-day call money rate may open near the RBI's repo rate of 6.25% due to demand for funds from banks early in the day to meet their reserve requirements.

GOVERNMENT BONDS

On Monday, gilt prices may open steady before the RBI's Monetary Policy Committee meeting begins, dealers said. The movement in US Treasury yields may also lend cues at the open. 

Traders are likely to retain their bets on a repo rate cut and stance change by the RBI's rate-setting panel keeping prices buoyed till Wednesday, dealers said. 

The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.44-6.53% during the day. On Friday, the 10-year gilt ended at INR 102.30, or 6.46%.

OIS RATES

On Monday, swap rates may take cues from the movement in US Treasury yields as US government data showed non-farm payrolls rose higher than expected in March, dealers said. The movement in government bond yields on may also lend cues to swap rates.

Short-term swaps will closely track the movement in the overnight Mumbai Interbank Offered Rate, with the RBI's liquidity measures seen keeping the rate near the repo rate of 6.25%, dealers said. Any further improvement in liquidity conditions will also be closely tracked by traders.

The one-year swap rate is seen at 5.90-5.95% and the five-year rate at 5.70-5.75%. On Friday, the one-year swap rate ended at 5.91% and the five-year swap rate closed at 5.73%.

CALL

On Monday, the one-day call money rate may open near the RBI's repo rate of 6.25% due to demand for funds from banks early in the day to meet their reserve requirements. During the day, the call rate is seen in a range of 5.75-6.40%, dealers said. On Saturday, the two-day call rate ended at 5.75%.

RBI AUCTION 

--RBI to hold overnight variable rate repo auction for INR 250 billion 1000-1030 IST on Monday

LIQUIDITY

--Total net outflows of INR 248.44 billion. The calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and reverse repo operations.

* Inflows

--INR 6.86 billion as coupon on state bonds on Sunday

--INR 44.81 billion as coupon on 6.79%, 2034 bond on Monday

--INR 37.04 billion as coupon on 6.45%, 2029 bond on Monday

--INR 22.85 billion as coupon on state bonds on Monday

* Outflows

--INR 579.51 billion on reversal of 45-day VRR tender on Monday

--INR 360.00 billion as payment for gilts on Monday

--INR 124.19 billion on reversal of three-day VRR tender on Monday

End

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

Reported by Srijita Bose

Edited by Akul Nishant Akhoury

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