More Stories

Informist, Wednesday, Sept. 10, 2025

MUMBAI – On Thursday, government bond prices and overnight indexed swap rates will track the overnight movement of US Treasury yields, dealers said. If US yields are little changed, then bond prices and swap rates may open steady.

On the domestic front, traders are waiting for CPI inflation data for August, due Friday. CPI inflation likely rose to 2.1% in August from an eight-year low in July because of the fading of the statistical effect of a favourable base and rise in food and gold prices, according to a poll by Informist. The reading is broadly priced into OIS rates and bond prices, and will not move the market if it is on expected lines, dealers said. Traders will closely track technical levels for cues.

Details of meetings between the Reserve Bank of India and bank treasury officials may also lend cues to traders. Central bank officials met primary dealers on Wednesday for feedback on the central government's borrowing plan for the second half of the year, according to dealers.

Traders may also take cues from geopolitical developments, especially on the US-imposed tariffs on India. There has been some thaw in relations between the two countries. US President Donald Trump on Tuesday said he was "pleased" to announce that India and the US were continuing negotiations to address the trade barriers between the two nations, and that there should be no difficulty in successfully concluding a trade deal. Mirroring Trump's sentiment on India-US trade negotiations, Prime Minister Narendra Modi said on Wednesday that the teams from the two countries were working to conclude the discussions at the earliest. Bond and swaps may also track the movement of crude oil prices and the rupee against the dollar.

On Thursday, the one-day call money rate is likely to open below the RBI's repo rate of 5.50% on ample liquidity surplus and lack of significant outflows. During the day, the call rate is seen in the range of 4.75-5.50%, dealers said.

GOVERNMENT BONDS

When the market opens Thursday, bond prices will track the overnight movement of US Treasury yields, dealers said. Sales or purchases from mutual funds will also impact bond prices. Bonds maturing in eight to 15 years may see some selling pressure after the RBI said the Centre would switch seven short-term gilts with five other longer-term gilts.

By the end of September, some dealers see the 10-year benchmark gilt yield hitting 6.38-6.40% if the US Federal Open Market Committee cuts rates and bets buildup of a cut by the RBI's rate-setting panel in October. In the near term, an upside in the yield on the 10-year benchmark gilt could be capped at 6.55%, dealers said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.40-6.60%. The bond Wednesday closed at INR 98.93, or a yield of 6.4790%.

OIS RATES

On Thursday, swap rates are likely to track the movement of US Treasury yields. On the domestic front, the next cue on interest rates will come in the form of India's CPI inflation data for August, due at 1600 IST Friday, dealers said.

A further fall in swap rates is unlikely, given the expected rate cut in the US, but traders remain uncertain about further rate cuts in India. At the same time, offshore traders are likely to continue receiving fixed rates and put downward pressure on swap rates, dealers said.

The one-year swap rate is seen in the range of 5.42-5.55% Thursday. The five-year contract is seen at 5.60-5.75%. The one-year OIS ended at 5.47% Wednesday and the five-year OIS ended at 5.70%.

CALL

On Thursday, the one-day call money rate is likely to open below the RBI's repo rate of 5.50% on ample liquidity surplus and lack of significant outflows. During the day, the call rate is seen in the range of 4.75-5.50%, dealers said. On Wednesday, the one-day call money rate ended at 5.00%. 

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 55.38 billion. The calculation of flows does not take into account redemption of the standing deposit facility and scheduled variable rate repo and variable rate reverse repo operations.

* Inflows

--INR 165.00 billion as redemption of 91-day Treasury-bills

--INR 141.50 billion as redemption of 182-day T-bills

--INR 77.34 billion as redemption of 364-day T-bills

--INR 23.46 billion as coupon payment on state bonds

--INR 5.00 billion as redemption of state bonds

--INR 7.64 billion as coupon on 10.18%, 2026 gilt

* Outflows

--INR 229.94 billion as payment for 91-day T-bills

--INR 70.00 billion as payment for 182-day T-bills

--INR 64.62 billion as payment for 364-day T-bills

End

Reported by Cassandra Carvalho

Edited by Ashish Shirke

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.