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Informist, Friday, Jun. 20, 2025

MUMBAI – On Saturday, the two-day call rate is likely to open below the Reserve Bank of India's repo rate. Outflows for goods and service tax may push volumes higher than usual, dealers said. Generally, on working Saturdays, the volumes are low as banks meet their requirement for funds the previous day.

During the day, the call rate is seen in a range of 4.80-5.35% and the tri-party repo rate in a range of 4.70-5.25%. On Friday, both the three-day call rate and the tri-party repo rate ended at 5.30%.

GOVERNMENT BONDS

Government bonds are not traded on Saturday. On Monday, bonds are likely to take cues from developments in the Israel-Iran conflict over the weekend, dealers said. Bond traders remain wary of any escalation in the conflict, with fears that crude oil prices could rise to $90-$100 per barrel if the situation worsens or the conflict widens, dealers said. Moreover, if the rupee falls sharply against the dollar due to rise in crude oil prices, it may also indirectly hit bond prices, they said.

Traders will also take cues from US Treasury yields. US markets were closed on Thursday. Traders will take cues from the movement of US yields Friday after the Federal Open Market Committee's policy decision Wednesday, dealers said.

The RBI on Friday said nine states will aim to raise INR 272 billion through auction Tuesday, lower than indicated amount of INR 301 billion stated in the Apr-Jun state bond auction calendar. Longer tenure bonds may fall Monday as some market participants had expected an even lesser size of state bond auction on Tuesday, dealers said.

With uncertainty on the geopolitical front, traders may continue to prefer liquid bonds such as the 10-year and 15-year gilts, they said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.28-6.35%. The yield on the most-traded 6.79%, 2034 bond is seen at 6.30-6.42% Monday. On Friday, the 6.33%, 2035 bond ended at 100.15, or 6.31%. The 6.79%, 2034 bond ended at INR 102.83, or 6.38%. 

OIS RATES

Overnight indexed swaps are not traded Saturday. On Monday, swap rates will track developments in the Iran-Israel conflict, dealers said. Swaps may also track the movement of gilt yields.

Traders will also take cues from the minutes of the RBI's Monetary Policy Committee meeting in June, released post market hours Friday. Traders will keenly track technical levels as swaps are seen largely range-bound due to lack of domestic cues. Swap rates will also track the movement of the rupee against the dollar.

Traders will also track liquidity in the banking system and the overnight Mumbai Interbank Offer Rate for direction on short-term swap rates. The one-year swap rate is seen in a range of 5.45-5.58% Monday. The five-year contract is seen at 5.60-5.80%. The one-year swap rate ended at 5.52% and the five-year swap ended at 5.75% on Friday.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 19.65 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 19.65 billion as coupon on state bonds

* Outflows

--Nil

End

US$1 = INR 86.59

Reported by Srijita Bose

Edited by Ashish Shirke

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