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Informist, Monday, Nov. 10, 2025

NEW DELHI – Government bond prices may open lower on concerns that the bomb blast here Monday was terror-linked, dealers said. This may lead to traders taking profit and cutting their bets on bonds after the sharp rise in prices over the past week.

Prime Minister Narendra Modi spoke to Home Minister Amit Shah and took stock of the situation following the bomb blast in the capital, government sources said Monday. At least eight people were killed and several injured in a blast near the Red Fort metro station. Delhi, Mumbai, and Uttar Pradesh, among other places, have been put on high alert after the blast, news reports said.

Overnight indexed swap rates may take cues from the movement in US Treasury yields. Dealers are also tracking developments in the talks between India and the US for a trade deal. 

Traders await domestic CPI inflation for October, due Wednesday. Traders have largely priced in a record low CPI print of 0.3-0.7%. The median of 12 economists' estimates puts CPI-based inflation at 0.3% in October, according to an Informist poll. The movement in crude oil prices and the rupee may influence gilt prices and swap rates.

On Tuesday, the one-day call money rate may open below the Reserve Bank of India's repo rate due to comfortable liquidity conditions. During the day, the call money rate is seen in the range of 4.80-5.50%, dealers said.

GOVERNMENT BONDS

On Tuesday, government bond prices may open lower on concerns over terror links in the Delhi bomb blast earlier Monday, dealers said. Traders are likely to trim risk after the consistent rise in bond prices over the past week on speculation of RBI buying bonds in the secondary market, though further such purchases may limit losses. 

"There will be offers first thing in the morning. Anybody would want to sell and get out of the market," a dealer at a primary dealership said. 

Further net purchases by the 'Others' category could continue to stoke hopes of the RBI buying bonds in the secondary market at a consistent pace for the first time since January. Bonds maturing in up to 15 years are seen as the target of these purchases and will be preferred by traders, dealers said. Net secondary market purchases from the 'others' segment, which includes the RBI, have totalled INR 205.47 billion between Monday and Friday, the best four-day stretch for the category since late June 2023. Data released after market hours Monday showed 'others' remained top net buyers Monday with net purchases of INR 33.24 billion.

Traders remain uncertain whether the RBI's Monetary Policy Committee will cut the repo rate in December. At the same time, confidence in demand matching supply and the government's fiscal strength has increased after the RBI accepted only bids worth only INR 210 billion against the notified INR 320 billion at the gilt auction on Oct. 31, dealers said. Traders continue to expect the RBI to soon conduct auctions to buy gilts, though estimates on the timing of such action vary.

Some traders also expect the announcement of an India-US trade deal in November, which may dent the outlook for bond prices in two ways, they said. An expected reduction in the 50% US tariff on India's exports would increase the growth outlook and weaken the case for a rate cut. At the same time, the rupee might rebound against the dollar, leading to the RBI buying the greenback to shore up its foreign exchange reserves. The infusion of rupee liquidity this will cause may weaken the case for OMO purchases in December, as some sections of the market expect, dealers said.

Movement in crude oil prices and the rupee may also influence gilts. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.42-6.50% Tuesday. The yield on the 6.33%, 2035 bond is seen at 6.45-6.54%. The 6.48%, 2035 gilt ended at INR 100.19, or 6.45% yield while the 6.33%, 2035 bond ended at INR 98.89, or 6.49% yield, Monday.

OIS RATES

On Tuesday, swap rates are likely to track the movement of gilt yields and US Treasury yields, dealers said. Traders will also track the systemic liquidity and subsequently, the overnight Mumbai Interbank Outright Rate, dealers said.

Nearing the end of trade Tuesday, traders may avoid aggressive positions ahead of domestic CPI inflation data for October, due Wednesday. Traders have largely priced in a low CPI print. GDP growth data for Jul-Sept, due on Nov. 28, is more keenly eyed for rate cut cues, dealers said. 

Swaps may also track the rupee's movement against the dollar and crude oil prices. The one-year swap rate is seen in the range of 5.40-5.55% and the five-year contract is seen at 5.68-5.80%. On Monday, the one-year swap rate ended at 5.47% and the five-year swap rate ended at 5.72%.

CALL

On Tuesday, the one-day call money rate may open below the RBI's repo rate due to low demand for funds as the liquidity is in comfortable surplus with no significant outflows, dealers said. Some traders expect the RBI to announce a variable rate reverse repo operation to prop up money market rates to near the repo rate of 5.50%.

During the day, the call money rate is seen in the range of 4.80-5.50%, dealers said. Activity by banks and mutual funds in initial public offerings may lead to volatility in money-market rates, dealers said. The one-day call rate ended at 4.95% Monday.

RBI AUCTION

--Nine states to raise INR 165.60 billion via bond sale

LIQUIDITY

Total net inflows of INR 46.32 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 14.01 billion as coupon on state bonds

--INR 32.31 billion as coupon on 5.79%, 2030 gilt 

* Outflows

--Nil

End

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

Reported by Aaryan Khanna

Edited by Deepshikha Bhardwaj

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