More Stories

Informist, Wednesday, Mar. 11, 2026

 

By Aaryan Khanna

 

NEW DELHI – The Reserve Bank of India's radio silence on the details of its next open market operation is unsettling bond traders ahead of the scheduled INR 500-billion purchase on Friday. Barely two days before the auction is to take place, the central bank has not yet notified the timing of the auction or the bonds it intends to purchase.

 

Not only is the official channel silent, so are the usual backchannel discussions between the RBI and bank treasuries. The central bank usually seeks feedback from large banks on which bonds it should offer to buy before it notifies the details of an auction. Out of the record quantum of OMO auctions it has conducted in 2025-26 (Apr-Mar), the RBI has bought a wide assortment of gilts across tenures taking into account the feedback of various state-owned and private-sector banks, dealers said.

 

"This time we have not got a call for feedback and that is the same thing we are hearing from the rest of the market," a treasury official at a state-owned bank said. "Even for the last auction that was notified on Friday (conducted Monday), there didn't seem to be any conversation between the RBI and the market."

 

In the absence of any real discussion, bond traders have hotly speculated which bonds the RBI will pick. These expectations have solidified into a preference for benchmark gilts in the five-, 10- and 15-year segments. The 6.01%, 2030 bond is an odds-on favourite, while hopes of the 6.48%, 2035 and 6.68%, 2040 bonds at the auction Friday have soared. In addition to the liquidity injection, buying these bonds would also help cap gilt yields in the market at a time of significant uncertainty and poor risk appetite amid the armed conflict in West Asia after the US and Israel attacked Iran on Feb. 28, dealers said.

 

However, a small section of the market participants disagrees, saying buying up the most-traded papers would limit the central bank's space for conducting on-screen OMO purchases. These usually happen in the 10-year benchmark as it is the most traded gilt, which the RBI can intervene in heavily without significantly upending the market. As the speculation builds, some banks have sought to contact the RBI on the reason for the delay in notifying the details of Friday's auction, dealers said.

 

Usually, the central bank notifies the details of its OMO auctions three or more working days before it conducts them. This is the practice it followed during a series of such purchases between December and February, announcing the bonds it would buy after the market hours on Friday for an OMO auction the following Thursday. That heads-up has shrunk to less than a single trading session -- after the market hours Friday, it announced an INR 500-billion purchase of seven bonds through auction Monday.

 

This gave bond traders no time to react or buy those bonds in the secondary market. The auction's rules state that participants with successful offers to sell bonds to the RBI must arrange for the stock to be available in their portfolios at 1200 IST the following working day. The daily settlement of gilts bought in the secondary market Monday on a 'T+1' basis would have been after 1200 IST Tuesday. Ultimately, only those who had the seven notified bonds on hand at 1700 IST, before the RBI's official announcement of the auction details, were able to tender the gilts at Monday's auction, dealers said.

 

"It's very unusual and in fact unfair to traders that the RBI is giving the market no time to adjust to the bonds he will buy," a dealer at a private-sector bank said. "There is no need for him to do this. It is already Wednesday and the auction is on Friday – in the earlier auction, there was no way at all that anyone (who did not have the bonds Friday) could participate."  End

 

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.