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Informist, Friday, Jan. 30, 2026

--RBI bought INR-126.55-bln gilts outside OMO auction in wk to Jan 23

MUMBAI – A week after skipping hotly anticipated bond purchases in the secondary market, data released Friday showed the Reserve Bank of India bought INR 126.55 billion of gilts outside open market operations in the week ended Jan. 23. The RBI accounts for its on-screen gilt trades based on the day of settlement. Its last secondary market activity was in the Jan. 2 week, when it bought a nominal INR 500 million of gilts on Dec. 31.

Purchases in the secondary market came in the same week that it bought INR 500 billion of gilts at OMO auction, on Jan. 22. Data showed the RBI conducted bond purchases worth INR 49.60 billion on Jan. 20, INR 47.85 billion on Jan. 21, and INR 29.10 billion outside auctions. The "Others" segment of bond market participants, which includes the RBI, provident funds and life insurers, net purchased gilts worth INR 93.29 billion from Jan. 16 to Jan. 22, as per data from Clearing Corp. of India.

Most traders did not expect the data to show any purchases and were sceptical after data for the previous two weeks did not show any such purchases, contrary to traders' expectations. A few traders had expect the data to show purchases of INR 30 billion to INR 40 billion. 

So far this month, the "Others" segment has net purchased gilts worth INR 385.43 billion, fuelling speculation that the central bank is purchasing gilts on-screen, especially the benchmark 10-year 6.48%, 2035 gilt, to prevent its yield from sustaining a rise above the psychologically crucial 6.70% level. However, since data in the previous two weeks did not confirm the RBI's buys, traders speculated that pension funds and insurance companies were purchasing gilts in the secondary market, especially due to robust appetite from them in primary auctions.

Earlier in the month, traders were speculating that the central bank was purchasing gilts on-screen to replenish its portfolio after the redemption of the 7.59%, 2026 gilt, after it made on-screen purchases at the time of maturity of the 5.15%, 2025 gilt in November. The RBI likely held INR 350 billion to INR 400 billion of the 2026 gilt, dealers said.

During discussions with the central bank earlier this month, several banks had asked the RBI to ramp up its secondary market purchases of bonds, Informist had reported. Smaller banks cited missing out on the OMO auctions and concentration of the liquidity infused by the RBI in the hands of a few market participants--the successful bidders at auctions.  End

Reported by Aaryan Khanna and Cassandra Carvalho

Edited by Tanima Banerjee

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