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Informist, Tuesday, Nov. 11, 2025

NEW DELHI – Government bond prices may open steady on Wednesday ahead of the release of October CPI inflation data at 1600 IST, dealers said. CPI inflation is seen at a record low of 0.3%, according to the median of an Informist poll of 12 economists. Traders expect the print to be between 0.3% and 0.7%, with a minority expecting a deflationary print.

Further net purchases by the "Others" category could continue to stoke hope 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 Reserve Bank of India, totalled INR 239 billion in the week to Monday. On Tuesday, the "Others" segment bought gilts worth INR 62.59 billion, more than any other category.

Developments following the blast in Delhi may be tracked closely. A security concern in Delhi or a strong response by the government may keep traders on tenterhooks, especially after the skirmish between Indian and Pakistan armed forces following a terrorist attack earlier this year, dealers said.

Overnight indexed swap rates are likely to track the movement of gilt yields and US Treasury yields at market open, dealers said. Traders will also track the CPI inflation data later in the day for cues on further rate cuts by the RBI's Monetary Policy Committee. Traders will also track systemic liquidity and subsequently, the overnight Mumbai Interbank Offered Rate.

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%.

GOVERNMENT BONDS

On Wednesday, government bond prices may open steady ahead of the October CPI inflation data at 1600 IST, dealers said. CPI inflation is seen at a record low of 0.3%, according to the median of an Informist poll of 12 economists. Traders expect the print to be between 0.3% and 0.7%, with a minority seeing deflation.

Further net purchases by the "Others" category could continue to stoke hope 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, totalled INR 239 billion in the week to Monday.

Developments following the blast in Delhi may be tracked closely. A security concern in Delhi or a strong response by the government may keep traders on tenterhooks, especially after the skirmish between Indian and Pakistan armed forces following a terrorist attack earlier this year, dealers said.

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 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, dealers said.

Movement in US Treasury yields, crude oil prices, and the rupee may also influence gilts. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.44-6.51% Wednesday. The yield on the 6.33%, 2035 bond is seen at 6.46-6.54%.

OIS RATES

On Wednesday, swap rates are likely to track the movement of gilt yields and US Treasury yields at market open, dealers said. Traders will also track data from the Clearing Corp. of India on segment-wise daily purchases and sales of government bonds for any indication of central bank on-screen purchases, dealers said.

Later in the day, focus will be on CPI data for October, for cues on further rate cuts by the RBI's MPC. Until CPI data is released, traders may avoid aggressive positions. Traders will track systemic liquidity and subsequently, the overnight Mumbai Interbank Offered Rate, and also developments in India-US trade talks.

Traders will keep an eye on the developments on the car blast in New Delhi Monday. Traders may unwind their positions if the government indicates any sign of retaliation to the blast, after trade minister Piyush Goyal said that the car blast showed "terrorism rearing its head again".

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%.

CALL

On Wednesday, 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.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 70 billion on Wednesday

--RBI to auction 182-day T-bills worth INR 60 billion on Wednesday

--RBI to auction 364-day T-bills worth INR 60 billion on Wednesday

LIQUIDITY

Total net outflows of INR 144.32 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 11.28 billion as coupon on state bonds

* Outflows

--INR 155.60 billion as payment on state bonds

End

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

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