More Stories

Informist, Tuesday, Jan. 27, 2026

MUMBAI – Government bond prices may open higher and overnight indexed swap rates will open lower Wednesday after the Reserve Bank of India advanced by a week the dates of two open market operation auctions it had announced Friday. In a release after market hours, the RBI said it would hold two OMO auctions of INR 500 billion each Thursday and Feb. 5, instead of Feb. 5 and Feb. 12. Some traders had hoped for an OMO auction this week, but the RBI scheduled both OMO auctions for next month.

The provision of a prepayment option for any amount borrowed at the 90-day variable rate repo auction to be held Friday is also likely to aid a rise in bond prices and fall in swap rates. Some traders had feared that the RBI's Monetary Policy Committee has ended its rate-cutting cycle, after the central bank announced a 90-day variable rate repo auction, since its tenure crosses the February policy meeting and is likely to include the April policy meeting as well. However, post market hours Tuesday, the RBI said that traders participating at the 90-day variable rate repo auction it will conduct Friday will have the option of prepaying the amount borrowed, indicating that the MPC would still have the option of cutting rates.

Gilts and swaps may also be influenced by the movement in US Treasury yields ahead of the US Federal Open Market Committee's meeting outcome. Any development on the India-US trade deal may also influence bond prices. Significant movement in the five-year OIS rate, the rupee, and crude oil prices may also lend cues, dealers said.

Wednesday, the one-day call money rate may open near or below the RBI's repo rate of 5.25% after the RBI said it will conduct a two-day variable rate repo auction of INR 500 billion at 0930-1000 IST. The RBI also said traders participating at the 90-day variable rate repo auction it will conduct Friday will have the option of prepaying the amount borrowed, easing concerns that the Monetary Policy Committee will no longer cut the repo rate. During the day, the call money rate is expected to move in a range of 4.70-5.55%, dealers said.

GOVERNMENT BONDS

Wednesday, bond prices may open higher after the RBI advanced the dates of two open market operation auctions it had announced Friday by a week. As for Thursday's OMO auction, the RBI has chosen to buy the 6.75%, 2029; the 7.17%, 2030; the 7.95%, 2032; the 7.26%, 2033; the 6.22%, 2035; the 7.18%, 2037; and the 7.30%, 2053 gilts. The 6.33%, 2035 bond price may open lower Wednesday as several traders were hoping the RBI would include it at the OMO auction. Contrary to traders' expectations, the RBI also has not chosen to purchase state bonds at the OMO auction. Bond traders may also track the result of the INR 290-billion Treasury bill auction after cut-off yields were at multi-month highs last week.

Traders are keenly tracking the Union Budget for FY27, to be presented Sunday. The Centre's gross borrowing aim is expected to be between INR 16 trillion and INR 17 trillion, compared with INR 14.72 trillion for FY26. A number higher than expected may weigh on bond prices while an increase in funding through Treasury bills or small savings and a gross borrowing number below INR 16 trillion would boost bond prices, dealers said. If the actual amount is significantly higher than INR 17 trillion, then the yield on the 10-year benchmark bond will likely rise till 6.80%, dealers said.

The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.65-6.75%. Tuesday, the bond ended at INR 98.30 or 6.7194% yield.

OIS RATES

On Wednesday, overnight indexed swap rates may open lower tracking a likely fall in gilt yields after the RBI advanced the dates of its open market operation auctions by a week. However, the movement of swaps will hinge on offshore flows, as they continue to pay fixed rates, dealers said. The one-year swap rate is seen at 5.52-5.68% and the five-year at 6.03-6.25%. Tuesday, the one-year swap rate ended at 5.59% and the five-year swap rate ended at 6.18%. 

CALL

Wednesday, the one-day call money rate may open near or below the RBI's repo rate of 5.25% after the central bank said it will conduct a two-day variable rate repo auction of INR 500 billion at 0930-1000 IST. The RBI also said traders participating at the 90-day variable rate repo auction it will conduct Friday will have the option of prepaying the amount borrowed, easing concerns that the Monetary Policy Committee will no longer cut the repo rate. During the day, the call money rate is expected to move in a range of 4.70-5.55%, dealers said. Tuesday, the one-day call money rate ended at 5.40%. 

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 90 billion

--RBI to auction 182-day T-bills worth INR 120 billion

--RBI to auction 364-day T-bills worth INR 80 billion

--RBI to hold two-day variable rate repo auction for INR 500 billion 0930-1000 IST

LIQUIDITY

Total net inflows of INR 10.34 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 10.34 billion as coupon on state bonds

* Outflows

--Nil

End

US$1 = INR 91.72

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

Reported by Cassandra Carvalho

Edited by Ashish Shirke

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.