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Informist, Tuesday, Nov. 4, 2025

 

NEW DELHI – Government bond prices and overnight indexed swap rates may open steady on Thursday due to a lack of significant domestic cues, dealers said. These may track the movement in US Treasury yields over the holiday. Money markets are shut Wednesday for Guru Nanak Jayanti. 

 

Dealers are also tracking developments in the talks between India and the US for a trade deal. Any progress in the talks may weigh on gilt prices, but any reports of a delay in the final announcement of the deal may support bonds, dealers said. US President Donald Trump Wednesday had 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 Thursday, the one-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. During the day, the call money rate is seen in the range of 4.90-5.60%, dealers said.

 

GOVERNMENT BONDS

On Thursday, government bond prices may open steady due to lack of fresh domestic cues. The movement in US Treasury yields during the holiday may lend cues at open, dealers said.

 

Expectations of the RBI buying gilts in the secondary market to infuse durable liquidity may push up prices of bonds maturing up to 15 years. Net secondary market purchases from the 'others' segment, which includes the RBI, have topped INR 40 billion each on Monday and Tuesday, which is likely to increase speculation that the central bank has already begun its purchases in the 10- and 15-year gilts, dealers said.

 

Traders continue to be uncertain whether the RBI's rate-setting panel will cut the repo rate in December. At the same time, confidence in demand matching supply and the government's fiscal strength 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 on the timing of such action vary.

 

Movement of 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% Thursday. The 6.33%, 2035 bond ended at INR 98.62, or 6.53% yield, while the 6.48%, 2035 gilt ended at INR 100.10, or 6.47% yield, Tuesday.

 

OIS RATES

On Thursday, 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%. On Tuesday, the one-year swap rate ended at 5.48% and the five-year swap rate ended at 5.70%. 

 

CALL

The one-day call money rate may open near the RBI's repo rate Thursday due to early demand for funds from primary dealerships, dealers said. Some traders expect the central bank to conduct a variable rate reverse repo auction for up to INR 500 billion if weighted average money market rates move to the standing deposit facility rate of 5.25%

 

During the day, the call money rate is seen in the range of 4.90-5.60%, dealers said. Activity by banks and mutual funds in initial public offerings may lead to volatility in money-market rates, dealers said. The two-day call rate ended at 4.95% Tuesday.

 

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 70 billion 1030-1130 IST

--RBI to auction 182-day T-bills worth INR 60 billion on 1030-1130 IST

--RBI to auction 364-day T-bills worth INR 60 billion on 1030-1130 IST

 

LIQUIDITY

Total net inflows of INR 366.71 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 12.76 billion as coupon on state bonds Wednesday

--INR 47.48 billion as coupon on 6.33%, 2035 gilt Wednesday

--INR 10.76 billion as coupon on state bonds Thursday

--INR 20.00 billion as redemption of state bonds Thursday

--INR 43.64 billion as coupon on 7.46%, 2073 gilt Thursday

--INR 221.61 billion on redemption of 91-day Treasury bill

--INR 60.00 billion on redemption of 182-day Treasury bill

--INR 66.46 billion on redemption of 364-day Treasury bill

 

* Outflows

--INR 116.00 billion as payment for state bonds

 

End

 

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

 

Reported by Aaryan Khanna 

Edited by Tanima Banerjee

 

 

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