More Stories

Informist, Wednesday, Oct. 15, 2025

NEW DELHI – Government bond prices and overnight indexed swap rates are likely to take cues from traders' assessment of the minutes of the Reserve Bank of India's Monetary Policy Committee meeting of Sept. 29-Oct. 1, dealers said. Some dealers said the minutes were a positive as the majority of members seemed in favour of policy easing but were unsure of the timing, while others said it offered no new clues or certainty that the panel would cut rates in December.

External members Ram Singh and Nagesh Kumar were the loudest voices calling for further policy easing, with both of them seeking to change the policy stance to 'accommodative' from 'neutral' as well. Singh said a stance change may help improve the impact of the policy easing cycle. RBI Governor Sanjay Malhotra said the aim of the policy was to facilitate growth-enabling conditions, even while the panel was unanimous in holding the repo rate in its latest meeting.

RBI Deputy Governor Poonam Gupta noted that the scope to cut policy rates was limited and seemed to signal that monetary policy may be best served until global uncertainty clears up. External member Saugata Bhattacharya said that the impact of prior actions on fiscal and monetary policy, along with banking regulation and other factors, need to be monitored before cutting rates further. The MPC had cut the repo rate by 100 bps between February and June.

The movement in the rupee against the dollar and crude oil prices may also lend direction. Traders will also look towards geopolitical developments, especially on the US-India trade front. 

On Thursday, the one-day call rate may open at the RBI's repo rate owing to demand for funds from banks early in trade. The strain may be apparent after Wednesday's two-day variable rate reverse repo auction and a likely liquidity drain due to the RBI's intervention in the foreign exchange market, dealers said.

GOVERNMENT BONDS

On Thursday, government bonds may take cues from the minutes of the Monetary Policy Committee's Sept. 29-Oct. 1 meeting released post market hours. The minutes showed that the panel diverged on the timing and intent behind cutting the policy repo rate any further. All the six members acknowledged that the sharp fall in inflation had opened up space for further monetary policy easing.

The overnight movement of US Treasury yields and the movement of the rupee against the dollar will also lend cues to gilts. Traders will realign portfolios ahead of the weekly gilt auction Friday.

Geopolitical developments and crude oil price movements will influence movement of gilts Thursday. The 6.48%, 2035 bond yield is seen falling to 6.40% before the next policy review in December, dealers said. On the technical front, the 6.33%, 2035 gilt yield is seen falling to 6.44% next, if it falls below the key 6.47% level.

The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.42-6.52% Thursday. On Wednesday, the 6.33%, 2035 bond ended at INR 98.94 or 6.48% yield. The newly-issued 6.48%, 2035 bond ended at INR 100.43, or a yield of 6.42%.

OIS RATES

OIS rates may take direction Thursday from the minutes of the Monetary Policy Committee's last meeting released post market hours. The minutes showed that the panel diverged on the timing and intent behind cutting the policy repo rate any further. All the six members acknowledged that the sharp fall in inflation had opened up space for further monetary policy easing.

Traders may continue receiving fixed rates and ramp up bets of one or more rate cuts in December and beyond after CPI inflation fell to an over-eight-year low of 1.54% in September from 2.07% in August. Economists project October CPI inflation at less than 1%, the lowest in the current series with 2012 as the base year. This is likely to put pressure on the MPC to ease rates further, though a December rate cut is fully priced in into the one-year swap rate for the past several weeks, dealers said.

On the global front, traders may track developments in the US after the government partially shut down in early October. The New York Times reported that the US CPI data for September may be released during the week, despite the shutdown. Traders may take cues from geopolitical developments, especially on India-US trade talks.

The one-year swap rate is seen in the range of 5.38-5.48% and the five-year contract at 5.55-5.66%. On Wednesday, the one-year swap rate ended at 5.42% and the five-year swap rate ended at 5.58%, an over five-month low.

CALL

On Thursday, the one-day call rate may open at the RBI's repo rate owing to demand for funds from banks early in trade, especially after Wednesday's two-day VRRR auction and a likely liquidity drain due to the RBI's intervention in the foreign exchange market, dealers said.

During the day, the one-day call money rate is seen in the range of 4.90-5.70%, dealers said. On Wednesday, the one-day call rate ended at 5.00%.

RBI AUCTION

--Nil

LIQUIDITY

Total net outflows of INR 10.97 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 164.00 billion as redemption of 91-day Treasury bills

--INR 50.00 billion as redemption of 182-day T-bills

--INR 85.00 billion as redemption of 364-day T-bills

--INR 11.00 billion as redemption of state bonds

* Outflows

--INR 164.03 billion as payment for 91-day Treasury bills

--INR 84.50 billion as payment for 182-day Treasury bills

--INR 72.44 billion as payment for 364-day Treasury bills

End

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

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 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.