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Informist, Friday, Oct. 31, 2025

NEW DELHI – The two-day call money rate may open near the Reserve Bank of India's repo rate of 5.50% owing to tight systemic liquidity, dealers said. Trade volumes may be muted as is usual on Saturdays, with banks having met their weekend requirements for funds on Friday.

During the day, the rate is seen in a range of 4.90-5.60%, dealers said. Friday, the three-day call rate ended at 5.10%.

The RBI has so far not announced a variable rate repo operation for Monday, which may keep money market rates elevated. However, the third tranche of the RBI's cash reserve ratio cut is expected to free up INR 700 billion of durable liquidity for banks starting Saturday.

GOVERNMENT BONDS

Monday, government bond prices may rise after the state bond auction notified for next week was smaller than indicated and after the RBI rejected all bids for INR 110 billion of the 6.28%, 2032 bond Friday. States plan to raise INR 136 billion via bonds Tuesday, against INR 194.50 billion in the December indicative calendar for the quarter ending December.

Traders continue to be uncertain whether the RBI's rate-setting panel will cut the repo rate in December. At the same time, confidence of demand matching supply and the government's fiscal strength have increased after the reduction in bond supply at Friday's auction, dealers said. Traders continue to expect the RBI to soon conduct open market operations to buy gilts, though estimates of the timing of such action vary.

Dealers will also track developments on the talks between India and the US for a trade deal. Progress in the talks may weigh on gilt prices but any reports of a delay in the final announcement of the deal may aid bonds, dealers said. US President Donald Trump Wednesday said he was ready for a trade deal with India.

Movement in US Treasury yields, crude oil prices, and the rupee may also influence gilts. The yield on the 10-year benchmark 6.33%, 2035 bond is seen at 6.48-6.59%. Meanwhile, the 6.48%, 2035 bond is seen moving in a range of 6.42-6.49% Monday. On Friday, the 6.33%, 2035 bond ended at INR 98.59 or 6.53% yield. The 6.48%, 2035 bond ended at INR 100.06 or 6.47% yield.

OIS RATES

On Monday, swap rates may track movement in US Treasury yields. Any sharp movement in government bond yields could also lend cues to swaps, dealers said. Traders will also track developments in India-US trade talks.

There is no immediate data scheduled on the domestic front that is likely to have a significant impact on swap rates, dealers said. Swaps may also track the rupee's movement against the dollar and of crude oil prices.

The one-year swap rate is seen in the range of 5.38-5.52% and the five-year contract is seen at 5.55-5.74%. On Friday, the one-year swap rate ended at 5.48% and the five-year swap rate ended at 5.67%.

RBI AUCTION

--Nil

LIQUIDITY

Total net inflows of INR 7.05 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 7.05 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 Aaryan Khanna

Edited by Akul Nishant Akhoury

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