More Stories

Informist, Friday, May 2, 2025

MUMBAI – On Saturday, the two-day call rate may open below the repo rate of 6.00% due to a comfortable liquidity surplus. As is usually the case on Saturdays, call money market volumes may remain low.

During the day, the call rate is seen in the range of 5.70-6.00% and the triparty repo rate in the range of 5.60-5.80%. On Friday, the three-day call ended at 5.85%.

Government bonds and overnight indexed swap rates are not traded on Saturday.

GOVERNMENT BONDS

On Monday, gilt prices are seen taking cues from any further developments between India and Pakistan, dealers said. If there are no developments, gilt prices could move in a narrow range, they said.

Demand for shorter-tenure gilts maturing within five years could remain firm during the day as traders will look to cut down longer-duration papers to reduce their risks amid geopolitical turmoil, dealers said. Demand for gilts maturing within seven to 15 years could also pick up as banks will look to buy them in place of bonds that the Reserve Bank of India bought through open market operation auctions, they said. Traders will also position for Tuesday's OMO auction, where the RBI has offered to buy INR 500 billion worth of seven gilts.

Gilts could take cues from US yields if they move sharply. India's provisional GDP growth estimates for Jan-Mar and 2024-25 (Apr-Mar), due at the end of May, could be the next major triggers for gilts. Despite geopolitical uncertainty, gilt yields are expected to remain below 6.45% as investors will look to buy gilts on hope of further rate cuts by the RBI's Monetary Policy Committee.

The yield on the 10-year benchmark 6.79%, 2034 bond is seen at 6.28-6.40% on Monday. On Friday, the 10-year gilt closed at INR 103.05, or 6.35% yield.

OIS RATES

On Monday, swap rates are likely to take cues from geopolitical developments between India and Pakistan, dealers said. Traders will unwind their received fixed-rate bets if there is major military activity between the two countries, dealers said.

The movement in US Treasury yields may also lend direction to swap rates. The impact of the offshore trigger may be muted as traders are convinced domestic interest rates are going to fall further, particularly after the release last week of the minutes of the Monetary Policy Committee's April meeting, dealers said.

Traders will track the movement of the overnight Mumbai Interbank Offer Rate for direction on short-term swap rates, with the expectation it would fall to near 5.75% from 5.95% on Friday. Swaps maturing in three years and above may be sensitive to developments in the US-China trade war and the broader US tariff policy.

The one-year swap rate is seen in a range of 5.55-5.75% on Monday. The five-year contract is also seen in the 5.55-5.75% range. On Friday, the one-year swap closed at 5.63% and the five-year swap closed at 5.59%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 7.87 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 7.87 billion as coupon on state bonds

* Outflows

--Nil

End

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

Reported by Srijita Bose

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. 2025. All rights reserved.