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Informist, Friday, Feb. 27, 2026

NEW DELHI – Government bond prices are seen opening lower Monday on account of profit-taking after they rose Friday and ahead of the large supply of state government bonds on the day. Thirteen states aim to raise INR 431.30 billion, higher than INR 358.05 billion mentioned in the states' borrowing calendar for the March quarter.

Overnight indexed swap rates may track the movement in US Treasury yields after US producer prices for January were released Friday, dealers said. Excluding food and energy, producer prices rose 0.8% on month against a Wall Street Journal poll estimate of 0.3%.

The two-day call money rate may open below the RBI's standing deposit facility rate of 5% owing to the comfortable liquidity surplus in the banking system after the month-end inflows over the weekend.

GOVERNMENT BONDS

Gilts are not traded Saturday. Monday, gilt prices may open lower on profit-taking after rising on Friday and ahead of the large supply of state government bonds, dealers said. Thirteen states will raise INR 431.30 billion. The movement in US Treasury yields may also lend cues after the benchmark 10-year US Treasury yield fell below the crucial level of 4% in Friday's session.

Demand from long-term investors is likely to be firm at the weekly state bond auction as most of the bonds are of medium- to long-term maturity, dealers said. Long-term investors who missed out at previous gilt and state bond auctions are expected to be active.

Thursday, the RBI had announced that the government will switch four bonds worth INR 250 billion maturing in FY27 with five longer-term gilts through an auction Monday. Traders largely see the auction as a positive for bond prices as it is likely to reduce the Centre's borrowing in FY27, dealers said.   

Traders may also track updates on the Iran-US situation, dealers said. Significant movement in the rupee, the five-year overnight indexed swap rate, and crude oil prices may also lend cues to gilts. The 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.63-6.75%.

OIS RATES

Swaps are not traded Saturdays. Monday, OIS rates may track the movement in US Treasury yields after the release of US producer prices for January, dealers said. The data were released after Indian market hours Friday.

Swap rates up to one year may rise in the near term since money market rates are seen rising while the five-year OIS rate may move in the range of 5.85-6.00%, dealers said. Developments on the US-Iran front will also be watched closely. Significant movement in the rupee and crude oil prices may also lend cues, dealers said. The one-year swap rate is seen in the range of 5.40-5.60% and the five-year at 5.85-6.08%.

CALL

The money markets are shut Saturday. On Monday, the two-day call money rate may open below the RBI's standing deposit facility rate of 5% owing to the comfortable liquidity surplus in the banking system after month-end inflows over the weekend. During the day, the call money rate is expected to move in the range of 4.75-5.25%.

RBI AUCTION

--Thirteen states to raise INR 431.30 billion via bond sale 1030-1130 IST Monday

LIQUIDITY

Total net outflow of INR 177.17 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 45.25 billion as coupon on state bonds Saturday

--INR 59.38 billion as coupon on 7.95%, 2032 gilt Saturday

--INR 27.50 billion as coupon on state bonds Sunday

--INR 10.70 billion as coupon on state bonds Monday

* Outflows

--INR 320.00 billion as payment for government bond auction Monday

End

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

Reported by Vaishali Tyagi

Edited by Rajeev Pai

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