India Money Market Outlook
Gilts may open steady Wed due to lack of cues
This story was originally published at 22:14 IST on 17 February 2026
Register to read our real-time news.Informist, Tuesday, Feb. 17, 2026
NEW DELHI – Government bond prices may open steady Wednesday due to lack of significant domestic cues. Gilts and overnight indexed swap rates may track the movement of US Treasury yields ahead of the minutes of the US Federal Open Market Committee's January meeting after Indian market hours. Traders may abstain from placing big bets on caution ahead of the release of the minutes at 0030 IST Thursday.
Traders expect liquidity in the banking system liquidity to stay in surplus and to support short-term gilts. The government will switch four bonds worth INR 250 billion maturing in 2026-27 (Apr-Mar) with five longer-term gilts through an auction on Monday, the Reserve Bank of India said in a release Tuesday. Earlier in the day, Informist had reported that the central bank had sought feedback from banks about conducting further switches in the current financial year to bring down the government's gross borrowing in FY27.
The RBI's Monetary Policy Committee is anticipated to keep the policy repo rate at 5.25% through FY27, dealers said. Traders do not expect further liquidity infusions or open market operations auctions to buy bonds from the RBI following comments by central bank officials after the monetary policy earlier this month.
Market participants may also track the movement of crude oil prices and the rupee against the dollar. On Wednesday, the two-day call money rate may open below the repo rate of 5.25% due to low demand for funds amid the surplus liquidity in the banking system. Money markets are shut Thursday for Shivaji Jayanti.
GOVERNMENT BONDS
On Wednesday, bond prices may open steady due to lack of significant domestic cues. Traders may also avoid large bets on caution ahead of minutes of the US FOMC's latest meeting.
Traders expect banking system liquidity to remain in surplus, aiding short-term gilts. After market hours, the RBI said that the government will switch four bonds worth INR 250 billion maturing in FY27 with five longer-term gilts through an auction on Monday. Earlier in the day, Informist had reported that the central bank had sought feedback from banks about conducting further switches in the current financial year to bring down the government's gross borrowing in FY27.
The RBI's Monetary Policy Committee is expected to keep the policy repo rate at 5.25% through FY27, dealers said. Traders do not expect further liquidity infusions or open market operations auctions to buy bonds from the RBI following comments by central bank officials after the monetary policy earlier this month. This is likely to keep the 10-year gilt yield in a band of 6.55-6.85% till March, dealers said.
Significant movement in US Treasury yields, 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 6.63-6.72% Wednesday.
OIS RATES
On Wednesday, OIS rates may track the movement of US Treasury yields ahead of the minutes of the US FOMC's January meeting, dealers said. Traders are betting on the 10-year US yield falling to 4.00% or lower, which could lead to the five-year OIS rate falling to 6.00% or lower.
While offshore traders may continue to receive fixed rate contracts in swaps, the fall in short-term swap rates is seen limited as traders expect the Overnight Mumbai Interbank Outright Rate to rise in the near term, dealers said. After India's CPI inflation data for January, the RBI's Monetary Policy Committee is now seen holding the policy repo rate at 5.25% through FY27, dealers said.
Traders may also track the movement of crude oil prices and the rupee against the dollar. The one-year swap rate is seen at 5.40-5.55% and the five-year at 5.95-6.15%.
CALL
On Wednesday, the two-day call money rate may open below the repo rate of 5.25% due to low demand for funds amid the surplus liquidity in the banking system. Money markets are shut Thursday for Shivaji Jayanti. During the day, the call rate is expected to move in a range of 4.50-5.25%. Call money rates may begin inching up later this week ahead of the outflows for GST payments to the government, dealers said.
RBI AUCTION
--RBI to auction 91-day T-bills worth INR 140 billion
--RBI to auction 182-day T-bills worth INR 120 billion
--RBI to auction 364-day T-bills worth INR 80 billion
LIQUIDITY
Total net outflows of INR 377.64 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 4.91 billion as coupon on state bonds
--INR 11.95 billion as coupon on 7.24% 2055 gilt
* Outflows
--INR 394.50 billion as payment for state bonds
End
Reported by Vaishali Tyagi
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.
To read more please subscribe
Share this Story:
