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Informist, Monday, Nov. 3, 2025

 

MUMBAI – Government bond prices may remain steady on Tuesday due to lack of fresh domestic cues. Gilts may take direction from the result of the state bond auction in the second half of trade, dealers said. States will raise INR 136 billion through bonds at 1030-1130 IST, against INR 194.50 billion in the indicative calendar for the quarter ending December.

 

Dealers are also tracking 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.

 

On the data front, traders await domestic CPI inflation for October, due on Nov. 12. Traders have largely priced in a low CPI print, but the impact of the Centre's cut in goods and services tax rates, which took effect on Sept. 22, is yet to be ascertained, dealers said. GDP growth data for Jul-Sept, due on Nov. 28, will also be tracked. There is no immediate domestic data scheduled that is likely to have a significant impact on swap rates, dealers said.

 

On Tuesday, the two-day call money rate may open near the Reserve Bank of India's repo rate due to early demand for funds from primary dealerships, dealers said.

 

GOVERNMENT BONDS

On Tuesday, government bond prices may open steady due to lack of fresh domestic cues. Gilt prices may take direction from the result of the state bond auction in the second half of trade, dealers said. States will raise INR 136 billion through bonds at 1030-1130 IST Tuesday, against INR 194.50 billion in the 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 has increased after the reduction in bond supply at Friday's auction, dealers said. Traders continue to expect RBI to soon conduct open market operations to buy gilts, though estimates on the timing of such action vary.

 

Movement of 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%. The 6.48%, 2035 bond is seen moving in a range of 6.42-6.49% Tuesday.

 

OIS RATES

On Tuesday, swap rates may track the movement of US Treasury yields at open. 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.

 

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%.

 

CALL

On Tuesday, the two-day call money rate may open near the RBI's repo rate due to early demand for funds from primary dealerships, dealers said. Financial markets are shut Wednesday for Guru Nanak Jayanti. Some traders expect the central bank to conduct a variable rate reverse repo auction for an amount up to INR 500 billion if weighted average money market rates move to the SDF rate of 5.25%

 

During the day, the call money rate is seen in the range of 4.90-5.60%, dealers said. Activity of banks and mutual funds in initial public offerings may lead to some volatility in money market rates, dealers said.

 

RBI AUCTION

--States will raise INR 136 billion through bonds at 1030-1130 IST Tuesday

 

LIQUIDITY

Total net inflows of INR 14.42 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 4.42 billion as coupon on state bonds 

--INR 10.00 billion on maturity of state bonds 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Kabir Sharma

Edited by Ashish Shirke

 

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