More Stories

Informist, Tuesday, Apr. 15, 2025

MUMBAI – Government bond prices and overnight indexed swap rates are seen taking cues on Wednesday from the overnight movement of US Treasury yields, dealers said. 

India's swap rates and gilt yields are likely to be sensitive to global cues amid the uncertainties on inflation and growth worldwide, dealers said. In the monetary policy statement, Reserve Bank of India Governor Sanjay Malhotra said the Monetary Policy Committee was watchful of global uncertainties.

With increasing expectations of the MPC cutting the repo rate by 25 basis points each in June and August, short-term gilt yields and swap rates may continue to fall in April, dealers said. Bond yields and swap rates have been falling after the RBI's MPC cut the repo rate by 25 bps to 6.00% and changed its stance to 'accommodative' from 'neutral'. Traders also expect the yield curve to become upward-sloping as global uncertainties may keep long-term swaps and gilt yields volatile. 

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

On Wednesday, the one-day call rate may open below the repo rate due to low demand for funds from banks as liquidity remains comfortable. During the day, the call rate is seen at 5.80-6.00% and the triparty repo rate at 5.75-5.90%. 

GOVERNMENT BONDS

On Wednesday, gilt prices may take cues from the overnight movement of US Treasury yields, dealers said. Traders expect bond prices to trade in a thin band until US yields soften significantly. Traders also await India's GDP growth estimates, which would provide cues on the MPC's rate-cutting trajectory. India's GDP growth for Jan-Mar and provisional estimates for FY25 will be released by the statistics ministry by the end of May. Some traders see bond yields rising slightly, as traders book profits and investors look to purchase gilts at higher yields, dealers said. 

Traders may also take cues from the movement of crude oil prices and the rupee against the dollar. The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.39-6.50% on Wednesday. On Tuesday, the 10-year gilt ended at INR 102.64, or 6.41% yield.

OIS RATES

On Wednesday, swaps may take cues from movements in US Treasury yields at open, dealers said. Traders are expecting repo rate cuts of another 50 bps by the end of 2025, but if expectations of further rate cuts firm up, it could lead to a fall in swaps, they said.

Any sharp rise in US yields is expected to lead to a rise in Indian swaps, especially in long-term contracts, dealers said. Meanwhile, short-term swaps on Wednesday will closely track the overnight Mumbai Interbank Offered Rate, which is expected to remain near the repo rate, and any further liquidity measures by the RBI.

The one-year swap rate is seen in the range of 5.65-5.80% and the five-year at 5.63-5.82%. On Tuesday, the one-year swap rate ended at 5.75% and the five-year swap rate closed at 5.71%.

CALL

On Wednesday, the one-day call rate may open below the repo rate due to low demand for funds from banks as liquidity remains comfortable. During the day, the call rate is seen at 5.80-6.00% and the triparty repo rate at 5.75-5.90%. On Tuesday, the one-day call rate ended at 5.60%.

RBI AUCTION 

--RBI to hold overnight VRR auction for INR 250 billion 1000-1030 IST

--RBI to auction 91-day T-bills worth INR 90 billion

--RBI to auction 182-day T-bills worth INR 50 billion

--RBI to auction 364-day T-bills worth INR 50 billion

LIQUIDITY

--Total net outflows of INR 16.82 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 3.18 billion as coupon on state bonds

--INR 10.00 billion as redemption of state bonds

* Outflows

--INR 30.00 billion as payment for state bonds

--INR 95.64 billion on reversal of overnight VRR tender

End

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

Reported by Cassandra Carvalho

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogenci 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.