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Informist, Friday, Nov. 14, 2025

 

MUMBAI/NEW DELHI – The Reserve Bank of India bought INR 124.70 billion worth of gilts through on-screen open market operations in the week ended Nov. 7, according to a data release. This is the first secondary market purchase by the central bank since it bought a minuscule INR 100 million of gilts in the week ended Sept. 26.

 

In the week ended Nov. 7, 'Others' – a category that includes the RBI, insurers and provident funds – had net bought INR 205.47 billion worth of gilts in the secondary market, according to Clearing Corp. of India data. Since there was a holiday during the week, that was the best four-session stretch from 'Others' since June 2023, leading to heavy speculation that the central bank had bought gilts in the secondary market.

 

The RBI bought gilts on only Nov. 3, Nov. 5 and Nov. 6, the data showed. Bond market participants had pegged the central bank's secondary market purchases significantly higher at around INR 180 billion last week, the majority of the purchases from the 'Others' category. However, the data is based on settlement date and would not account for secondary market purchases on Nov. 7, which will show in official data next week. From Nov. 3 till Nov. 6, the 'Others' segment net purchased gilts worth INR 141.93 billion, according to data from Clearing Corp. of India.

 

Through its purchases, the RBI infused liquidity worth INR 40.20 billion on Nov. 4, INR 43.35 billion on Nov. 6, and INR 41.15 billion on Nov. 7. Some bond traders speculated this was a move to cap gilt yields, and that on-screen purchases might set the stage for an open market purchase of gilts through auction. Traders expect the RBI to purchase around INR 1.00 trillion worth of gilts by end of this financial year through open market purchases – both through auction and in the secondary market, with most expecting an OMO auction calendar in Jan-Mar, if not in December itself.

 

The central bank last bought gilts in a significant quantum in the secondary market in the latter half of January, buying INR 388.15 billion within two weeks. It then proceeded to buy gilts at OMO auctions over the next four months, shoring up its bond portfolio by INR 5.20 trillion by May. Economists cited the drawdown in durable liquidity as the central bank's prime concern. The liquidity hole created by the central bank's dollar sales to support the rupee may need to be filled by up to INR 3.5 trillion of government bond purchases through open market operations in Jan-Mar if India and the US do not agree to a trade deal, QuantEco Research said in a note.

 

However, the RBI held INR 150 billion to INR 300 billion of the 5.15%, 2025 gilt which matured Sunday, and some traders see its secondary market purchases as replenishing its portfolio while balancing the liquidity impact in the banking system.

 

"So Friday (Nov. 7), Monday and Tuesday - we saw 'Others' buy as well. If he's (RBI) doing (buying) 4k (INR 40 billion) daily--then roughly 25k (INR 250 billion) in total (from Nov. 3 till Tuesday), near about there only," a dealer at a private sector bank said. "Looks like replacement demand of 5.15%, 2025 (gilt) and no additional infusion of durable liquidity. Can see similar (buying) when 7.59%, 2026 (gilt) matures in Jan 2026."

 

Since Nov. 3, the 'Others' segment has net purchased gilts worth INR 324.36 billion, data shows. Daily purchases by the 'others' segment fell below INR 15 billion Wednesday and Thursday after a healthy daily average net purchase of around INR 50 billion by this segment from Nov. 3 till Tuesday. Traders speculate that the central bank was largely purchasing the 6.33%, 2035 bond and the 6.48%, 2035 bond, and a smaller quantum of the 15-year 6.68%, 2040 gilt. With the data Friday confirming the speculation that the central bank was buying bonds, all eyes will be on subsequent weeks' data to ascertain what the pace of purchases will be. A larger sample size and when the RBI ends these purchases would also help identify the motive behind the sales, dealers said.  End

 

Reported by Aaryan Khanna and Cassandra Carvalho

Edited by Ashish Shirke

 

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