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Informist, Friday, Nov. 21, 2025

 

NEW DELHI – Government bond prices may open slightly higher Monday as traders, who had shed bonds based on the erronous data that Reserve Bank of India sold gilts, add to their portfolios, dealers said. After market hours, the central bank corrected the data to show it bought INR 148.10 billion worth of bonds in the Nov. 14 week through open market operations in the secondary market, rather than sell that amount, dealers said. Some banks may also pick up gilts as the yield on the most-traded bond ended at a three-week high Friday. 

 

Money markets are shut Saturday. Overnight indexed swap rates may take cues from the movement in US Treasury yields. Dealers will also focus on India's GDP data for the September quarter, which is scheduled for Nov. 28. The GDP data is the next cue on the domestic rate trajectory. Traders largely expect a print of around 7.2%, against the RBI's projection of 7.0%. 

 

Traders will also keep an eye on the central bank's management of the rupee after it slumped and hit a record low Friday. Dealers will also track developments related to the talks between India and the US for a trade deal. Any progress in the talks may weigh on rate cut hopes but any reports of a delay in the final announcement of the deal may support bond prices and pull down OIS rates, dealers said. 

 

On Monday, the one-day call money rate may open near the RBI's repo rate on early demand for funds as the liquidity surplus declines due to outflows for goods and services tax payments. 

 

GOVERNMENT BONDS

Government bond prices may open slightly higher on Monday as traders who had shed bonds based on the erronous data entry saying RBI sold gilts may pick up gilts since the data showed the central bank bought bonds in the Nov. 14 week, dealers said. 

 

Traders will also monitor the net purchases and sales in the secondary market Friday from the 'Others' segment, the category that includes the RBI. Net secondary market purchases from the 'Others' segment totalled INR 31.31 billion on Friday, according to Clearing Corp. of India data. These are likely to reflect purchases from life insurers after the gilt auction rather than the central bank, dealers said.

 

The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.47-6.56% Monday. The yield on the 6.33%, 2035 bond is seen at 6.51-6.60%. Friday, the 10-year benchmark 6.48%, 2035 gilt closed at INR 99.72, or 6.52% yield, while the 6.33%, 2035 bond ended at INR 98.35, or 6.57% yield, closing above 6.55% for the first time since Oct. 30.

 

OIS RATES

On Monday, swap rates are likely to track movement in US Treasury yields, dealers said. There are no major cues scheduled on domestic interest rates until next week's September quarter GDP data release. 

 

Traders will also track systemic liquidity and the overnight Mumbai Interbank Outright Rate, dealers said. Traders may continue trading swaps maturing in under a year to adjust their rate-cut bets and bet on the spread between MIBOR and money market rates.

 

Monday, the one-year swap rate is seen at 5.40-5.55% and the five-year rate is seen at 5.68-5.85%. On Friday, the one-year swap rate ended at 5.48%, while the five-year swap rate closed at 5.77%. 

 

CALL

On Monday, the one-day call money rate may open near the RBI's repo rate on early demand for funds as the liquidity surplus declines due to outflows for GST payments. Some traders expect the RBI to conduct short-term fine-tuning liquidity injections after the seven-day variable rate repo auction Friday was poorly bid against the INR 500-billion notified amount. 

 

The one-day call money rate is seen in a range of 4.85-5.60%, dealers said. The three-day call rate ended at 5.45% Friday.

 

RBI AUCTION

--Nil

 

LIQUIDITY

Total net outflows of INR 145.10 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 20.90 billion as coupon on state bonds Saturday

--INR 12.08 billion as coupon on state bonds Sunday

--INR 58.02 billion as coupon on 7.54%, 2036 gilt Sunday

--INR 36.86 billion as coupon on state bonds Monday

--INR 27.05 billion as coupon on 8.15%, 2026 gilt

 

* Outflows

--INR 300.00 billion as payment for gilt auction Monday

 

End

 

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

 

Reported by Pratiksha

Edited by Deepshikha Bhardwaj

 

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