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Informist, Friday, Feb. 6, 2026

MUMBAI – The two-day call money market rate may open below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on Saturday due to low demand for funds. During the day, the call money rate is expected to move in a range of 4.50-5.00% due to low trading volume, as is usually the case on Saturdays, dealers said.

Dealers said call rate may rise above SDF rate due to outflows for excise duty payments. The market expects around INR 700 billion worth of outflows for excise duty payments between Saturday and Monday. The three-day call rate closed at 4.45% Friday. Government bond prices and overnight indexed swap rates are not traded Saturdays. 

GOVERNMENT BONDS

On Monday, bond prices may take cues from the movement in US Treasury yields over the weekend. Some traders were tracking the negotiations between the US and Iran scheduled Friday on cues for geopolitical risks and the movement of the rupee, dealers said.

Traders do not expect further liquidity infusion and monetary policy support from the RBI after its officials' comments following the Monetary Policy Committee's decision Friday.

No further rate cuts are likely to be forthcoming from the rate-setting panel in the remainder of 2026, dealers said. This is likely to keep the 10-year gilt yield in a band of 6.60-6.85% till March, they said.

Traders await details of the India-US trade deal to gauge its impact on inflation and growth. Traders will also track liquidity in the banking system, as the RBI's liquidity infusion measures this week are expected to add around INR 1.4 trillion to the liquidity surplus Friday.

Significant movement in the rupee and crude oil prices may also lend cues, dealers said. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.70-6.82% Monday. On Friday, the bond ended at INR 98.19, or 6.74% yield.

OIS RATES

Swap rates are not traded Saturday. On Monday, OIS rates may open steady after the volatility following the monetary policy decision on Friday, dealers said.

With the MPC maintaining a status quo on the repo rate at 5.25% and policy stance at "neutral", as expected, traders wait for upcoming data prints in the domestic market. RBI Governor Sanjay Malhotra was seen hinting at a terminal repo rate at 5.25%, with the Monetary Policy Committee likely to opt for a prolonged pause, dealers said. Traders expect overnight MIBOR fixings to remain near the policy repo rate going ahead.

Traders may also track movement in US Treasury yields, Indian government bond yields, crude oil prices and the rupee movement for direction on swap rates. The one-year swap rate is seen at 5.40-5.60% and the five-year at 6.05-6.28%. On Friday, the one-year swap rate ended at 5.53% and the five-year swap rate ended at 6.19%.

RBI AUCTION

--Nil

LIQUIDITY

Total net inflows of INR 36.24 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 26.24 billion as coupon on state bonds

--INR 10.00 billion as redemption of state bonds

* Outflows

--Nil

End

Reported by Shubham Rana and J. Navya Sruthi

Edited by Tanima Banerjee

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