More Stories

Informist, Thursday, Nov. 13, 2025

NEW DELHI – Government bond prices may open lower Friday ahead of the weekly bond auction at 1030-1130 IST. The RBI's announcement of a three-day, variable rate reverse repo auction of INR 1 trillion is likely to push up overnight rates and reduce demand for gilts, dealers said.

Moreover, traders expect poor demand at the auction, with long-term investors keeping to the sidelines and traders now unenthused after the pace of the Reserve Bank of India's speculated gilt buys has slowed. The government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 bond at the auction.

Overnight indexed swap rates are likely to track gilt and US Treasury yields at market open, dealers said. Short-term swap rates may rise after easing over the past few days due to the lower overnight Mumbai Interbank Outright Rate fixing from the lack of a VRRR amid surplus liquidity. Gilt prices and swap rates may also track crude oil prices and movements in the rupee. 

On Friday, the three-day call money rate may near the repo rate of 5.50% after the RBI announced a long-awaited VRRR auction. Liquidity remains in a comfortable surplus and there are no significant outflows, and so the liquidity drain will only prop up the call money rate to near the repo rate, dealers said.

GOVERNMENT BONDS

On Friday, government bond prices may open lower ahead of the weekly bond auction at 1030-1130 IST. The RBI's announcement of a three-day, variable rate reverse repo auction of INR 1 trillion is likely to push up overnight rates and reduce demand for gilts at the auction, dealers said.

Moreover, traders expect poor demand at the auction, with long-term investors keeping to the sidelines and traders now unenthused after the pace of the RBI's speculated gilt buys has slowed. The government will sell INR 160 billion of the 6.68%, 2040 bond and INR 120 billion of the 6.90%, 2065 bond at the auction.

Net secondary market purchases from the 'others' segment, which includes the RBI, totalled INR 315.10 billion between Nov. 3 and Wednesday. 'Others' net bought only INR 9.21 billion worth of gilts on Thursday, according to Clearing Corp. of India data released after market hours. Bonds maturing in up to 15 years were seen as the target of these purchases and may fall sharply on Friday, dealers said.

While several traders expect a rate cut at the monetary policy review in December, some said the MPC may hold off on rate cuts if GDP growth remains robust, as the inflation trajectory is expected to rise in the next few months. India's GDP data for Jul-Sept is scheduled on Nov. 28, a week before the next policy review.

Traders continue to expect the RBI to soon conduct auctions to buy gilts in December to infuse durable liquidity or the latest in the March quarter. The fear of additional bond supply for both the Centre and states has receded amid the muted borrowing from both entities since the beginning of October, dealers said.

Some traders also expect the announcement of an India-US trade deal soon, which may dent bond prices in two ways, they said. The likely 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, prompting the RBI to buy 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.

The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.46-6.52% Friday from 6.47% Thursday. The yield on the 6.33%, 2035 bond is seen at 6.50-6.56% from 6.52% Thursday. 

OIS RATES

On Friday, swap rates are likely to track gilt and US Treasury yields at market open, dealers said. Short-term swap rates may rise after easing over the past few days due to the lower overnight MIBOR fixing from the lack of a VRRR amid surplus liquidity.

The overnight MIBOR rate has been set below the repo rate for the entire month so far, after being set at 5.69% on Oct. 31. It is likely to rise to around 5.45% from 5.39% Thursday. Any demand for bond forward rate agreements by insurers and pension funds for the long-term gilt at the weekly bond auction Friday may lead to banks hedging these agreements by paying fixed rate contracts in longer-term swap rates, dealers said. 

Traders will also track geopolitical developments, especially regarding a US-India trade deal, or any developments in the investigation into the Monday car blast in Delhi, after the Centre called the incident an act of terrorism. Any names of foreign groups or countries being involved in the attack will push up swap rates as it will trigger dealers' concerns of retaliation by India, dealers said.  

On the data front, traders await Jul-Sept GDP data, due on Nov. 28, for cues on the possibility of rate cuts by the RBI's Monetary Policy Committee, after CPI inflation data failed to increase bets of a rate cut in December. India's GDP likely grew 7.2% in the September quarter, according to India Ratings and Research Pvt. Ltd. 

The one-year swap rate is seen in the range of 5.40-5.55% and the five-year contract is seen at 5.65-5.80%. On Thursday, the one-year rate ended at 5.46% and the five-year rate ended at 5.71%.

CALL

On Friday, the three-day call money rate may near the repo rate of 5.50% after the RBI announced a long-awaited VRRR auction. Liquidity remains in a comfortable surplus and there are no significant outflows, and so the liquidity drain will only prop up the call money rate to near the repo rate, dealers said.

During the day, the call money rate is seen in the range of 4.90-5.50%, dealers said. Activity by banks and mutual funds in initial public offerings may lead to volatility in money-market rates.

RBI AUCTION

--Govt to auction two gilts worth INR 280 billion at 1030-1130 IST

--RBI to conduct 3-day, INR 1-trillion variable rate reverse repo auction 0930-1000 IST

LIQUIDITY

Total net inflows of INR 5.54 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 5.54 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 Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.