More Stories

Informist, Tuesday, Jan. 6, 2026

 

By Cassandra Carvalho

 

MUMBAI – Overnight indexed swap rates ended lower Tuesday tracking the movement in bond yields, dealers said. Some traders speculated that offshore traders were receiving fixed rate contracts, dealers said. 

 

The one-year swap rate ended at 5.48%, compared to 5.49% Monday. The five-year swap rate ended at 5.95%, from 5.98% at the end of the previous session. The total notional trade volume on Clearing Corp. of India Ltd.'s derivatives trading platform was INR 230.50 billion, lower than INR 342.45 billion Monday. The yield on the benchmark 10-year US Treasury note was 4.19% at 1700 IST, from 4.17% at the same time Monday.

 

"In OIS, there was some receiving, probably from offshore only," a trader at a primary dealership said. "Currently, (five-year) OIS is trading in a range of 5.91-6.00%, so people are just playing the range right now."

 

Offshore traders may have received fixed-rate contracts, especially in the five-year swap rate, dealers said. Foreign banks, primary dealers, and offshore traders are expected to receive swap rates this month, dealers said earlier. Market participants await the announcement of the inclusion of India's fully accessible route bonds to Bloomberg's flagship Global Aggregate Index, expected this month. So far, the only foreign inflows have been passive flows tracking indices in which Indian gilts are already included, dealers said.

 

Bond prices rose nearing the end of the session on hopes that the central bank would buy liquid, profitable bonds at the INR 500 billion open market operation auction scheduled for Monday. Traders were especially betting on the Reserve Bank of India choosing to buy the 6.33%, 2035 bond, and bought the bond and received fixed rate contracts in swaps. Post market hours, the RBI announced that it will buy the 7.04%, 2029; the 6.79%, 2031; the 8.32%, 2032; the 7.10%, 2034; the 6.64%, 2035; the 7.18%, 2037; and the 7.30%, 2053 gilts.  

 

Some traders played on spreads between the one-year swap rate and the two-year swap rate, by receiving the one-year swap rate and paying the two-year swap rate, dealers said. 

 

"If at all market is scared, pay the two-year (OIS rate)," a dealer at a private-sector bank said. "One can hedge some part of their positions in two-year, and if at all they don't want to pay OIS right now they can make it a steepener, make it notionally neutral. Receive one-year (OIS rate) and pay two-year (OIS)." 

 

OUTLOOK

On Wednesday, swap rates may open higher, tracking an expected rise in bond yields after the RBI did not include the liquid, erstwhile 10-year benchmark in the list of gilts it offered to purchase at Monday's OMO auction. The RBI has offered to buy the 7.04%, 2029; the 6.79%, 2031; the 8.32%, 2032; the 7.10%, 2034; the 6.64%, 2035; the 7.18%, 2037; and the 7.30%, 2053 gilts Monday. 

 

On the data front, traders await the release of the first advance estimate of GDP for 2025-26 (Apr-Mar), due at 1600 IST Wednesday. According to an Informist poll of 11 economists, India's GDP is expected to rise 7.5% in FY26. However, positioning before the data print was light for most traders, dealers said. Traders were more focused on supply concerns in the government bond market, and would likely only track the data for cues on the Centre's target for GDP growth in FY27, dealers said.

 

Traders will closely track technical levels on swaps, as the five-year swap neared the key 6.00% level earlier this week. Traders will also monitor developments in the India-US negotiations for a trade deal. They may also track crude oil prices and geopolitical developments for cues. The one-year swap rate is seen at 5.40-5.52% and the five-year at 5.85-6.10%, Wednesday.

 

	At 1700 IST	MONDAY
1-year OIS	5.48%	5.49%
2-year OIS	5.58%	5.59%
5-year OIS	5.95%	5.98%
2-year MIFOR	6.01%	6.06%
5-year MIFOR	6.41%	6.45%

 

End

 

US$1 = INR 90.1650

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

 

Edited by Tanima Banerjee

 

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. 2026. All rights reserved.