More Stories

Informist, Wednesday, Mar. 11, 2026

MUMBAI – On Thursday, as seen so far this month, government bond prices and overnight indexed swap rates are likely to track Brent crude oil futures for May delivery and the overnight movement in the US Treasury yields amid developments in the military conflict in West Asia. However, any fall in bond prices may be offset amid speculation that the Reserve Bank of India will purchase gilts in the secondary market. 

Oil prices are seen volatile in the near term as conflicting statements by various political and defence personnel leave uncertainty about when the West Asia war will end. Brent crude oil futures for May delivery remained around $90 per barrel post market hours even after reports that the 32 member countries of the International Energy Agency will release 400 million barrels of emergency oil reserves, the largest release of oil reserves in its history. US President Donald Trump said the war against Iran could end "soon" since there was "practically nothing left to target". Iran's Revolutionary Guard said it fired on two vessels in the Strait of Hormuz after they ignored warnings.

The one-day call rate is likely to open at 5.15-5.18% on Thursday, driven by demand for funds as the reporting fortnight nears its close and for payments of advance tax on income tax and corporation tax. However, the call rate is expected to decline as the day progresses due to ample liquidity in the banking system. The weighted-average call rate is likely to be around 5.10% Thursday. Dealers see the call rate at 4.75-5.20% Thursday. On Thursday, there will be outflows of INR 375 billion for payments for treasury bills auctioned and inflows of around INR 413 billion from redemptions of treasury bills and coupon payments on state government bonds.

GOVERNMENT BONDS

On Thursday, bond prices will closely track the movement of crude oil prices, as has been the trend so far this month. However, elevated crude prices may be offset by speculation of the RBI purchasing gilts on-screen, after the 'Others' segment of bond market participants--which includes insurance companies, provident funds, and the RBI--was the only substantial net buyer of gilts Wednesday, net purchasing gilts worth INR 53.14 billion. This may also offset disappointment from the lack of any liquid papers being included in the OMO auction Friday. The bonds the RBI has chosen to buy at the auction are:

--the 6.45%, 2029 bond,

--the 7.95%, 2032 bond,

--the 6.79%, 2034 bond,

--the 6.64%, 2035 bond,

--the 7.41%, 2036 bond, 

--the 7.62%, 2039 bond,

--and the 7.06%, 2046 bond.

Any significant movement in the rupee against the dollar and OIS rates will also lend cues to bond prices during the day, dealers said. Traders are not carrying heavy positions in gilts as constant developments in the West Asia conflict keep traders wary of the likelihood of crude oil prices rising further, they said. Traders expect the yield on the 10-year benchmark bond to rise to up to 6.78-6.80% if the situation in West Asia worsens. However, after the 10-year benchmark bond yield closed below the key 6.65% level Wednesday, bond yields could fall further, on the technical front, especially if the RBI intervenes, dealers said. The 10-year benchmark 6.48%, 2035 bond is seen in a range of 6.59-6.75%. On Wednesday, the bond ended at INR 98.90, or 6.64% yield.

OIS RATES

As has been the trend through March, traders will focus on offshore developments to determine the movement of OIS rates, especially the movement of crude oil prices and US Treasury yields. Developments in the West Asia conflict will be tracked. Oil prices are seen volatile in the near term as conflicting statements from various political and defence personnel leave uncertainty about when the war in West Asia will end. 

The five-year swap could rise to 6.55-6.62% if Brent crude oil once again rises to $120 per barrel and upwards. If crude oil futures fall back to around $80 a barrel, the five-year swap could ease to as low as 6.15% as stop-losses will be triggered on paid fixed-rate bets, dealers said. Swap rates maturing in up to one year may also be volatile as traders bet on whether higher inflation or lower growth will tip the votes of MPC members on further rate action. 

Indian government bond yields are seen largely cushioned from the impact of the West Asia conflict due to purchases by the RBI, both on-screen and via auction, dealers said. On the domestic front, the RBI is seen providing ample liquidity to the banking system for transmission of easy monetary policy after the 125 bps of rate cuts in 2025. Significant movement in the rupee may also lend direction, dealers said. The one-year swap rate is seen at 5.62-5.90% and the five-year at 6.15-6.55%. Wednesday, the one-year swap rate ended at 5.74% and the five-year swap rate at 6.35%.

CALL

The one-day call rate is likely to open at 5.15-5.18% on Thursday, driven by demand for funds as the reporting fortnight nears its close and for payments of advance tax on income tax and corporation tax. However, the call rate is expected to decline as the day progresses due to ample liquidity in the banking system. The weighted-average call rate is likely to be around 5.10% Thursday. Dealers see the call rate at 4.75-5.20% Thursday. 

On Thursday, there will be outflows of INR 375 billion for payments for treasury bills auctioned and inflows of around INR 413 billion from redemptions of treasury bills and coupon payments on state government bonds. On Wednesday, the one-day call rate closed at 4.75%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 38.04 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 180.00 billion as redemption of 91-day Treasury bills

--INR 70.00 billion as redemption of 182-day T-bills

--INR 83.73 billion as redemption of 364-day T-bills

--INR 19.52 billion as coupon on state bonds

--INR 59.60 billion as coupon on 7.36%, 2052 gilt

* Outflows

--INR 161.73 billion as payment for 91-day T-bills

--INR 130.00 billion as payment for 182-day T-bills

--INR 83.08 billion as payment for 364-day T-bills 

End

US$1 = INR 92.0400

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

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.