India Money Market Outlook
Two-day call seen below RBI's repo rate Sat
This story was originally published at 21:47 IST on 3 October 2025
Register to read our real-time news.Informist, Friday, Oct. 3, 2025
MUMBAI – The two-day interbank call money rate may open below the Reserve Bank of India's repo rate on low demand for funds on Saturday, dealers said. As is usual for a Saturday, trade volumes may remain low.
During the day, the two-day call money rate is seen in a range of 4.75-5.50%, dealers said. On Friday, the three-day call rate ended at 5.45%
Government bonds and overnight indexed swap rates are not traded on Saturdays.
GOVERNMENT BONDS
On Monday, government bonds may take cues from the movement in US Treasury yields.
On Friday after market hours, the RBI said states will borrow INR 2.82 trillion though bonds in Oct-Dec. This is lower than expectations of INR 3.2 trillion to INR 3.5 trillion, which could lead to a rise in longer tenure bonds Monday. However, with expectation of a steepening in the yield curve due to rate cut bets, more traders may prefer shorter tenure bonds, dealers said.
Traders expect gilts to continue to rise after the RBI's Monetary Policy Committee opened up doors for a rate cut in the future. The 2035 bond yield is seen falling up to 6.40-6.45% levels but traders will wait for the auction and the CPI inflation for September as the next trigger to take further cues, dealers said.
Traders may also take cues from developments in India-US trade talks. Bond traders may also track the movement in crude oil prices. The movement in the rupee against the dollar and US Treasury yields could also lend cues to gilts, dealers said. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.45-6.60% on Monday. On Friday, the 2035 bond ended at INR 98.72 or 6.51% yield.
OIS RATES
On Monday, swap rates may take cues from the movement of US Treasury yields at open. Traders may continue receiving fixed rates and ramp up bets of one or more rate cuts in December and beyond after the MPC signalled that low inflation had opened up space for policy easing, dealers said.
On the global front, traders may track developments in the US after the government partially shut down Wednesday. Traders may take cues from geopolitical developments, especially regarding US tariffs on Indian goods.
Swaps may also track the movement of the rupee against the dollar and that of crude oil prices. The one-year swap rate is seen in the range of 5.40-5.50% and the five-year contract at 5.62-5.73%. On Friday, the one-year swap rate ended at 5.43% and the five-year swap rate ended at 5.67%.
RBI AUCTION
--Nil
LIQUIDITY
--There are no scheduled inflows or outflows for Saturday.
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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