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Informist, Friday, Mar. 13, 2026

MUMBAI – Money markets are shut Saturday. On Monday, government bond prices are seen falling due to larger-than-expected state bond supply Tuesday. Gilts and overnight indexed swap rates will also track Brent crude oil prices for May delivery. Traders will also track US Treasury yields. On the data front, the US Bureau of Economic Analysis Friday revised downward US GDP in Oct-Dec to 0.7% from 1.4%.

Some traders expect the Reserve Bank of India to announce liquidity infusion measures for next week, such as additional open market operations auctions, a dollar-rupee buy-sell swap, or a variable-rate repo auction of at least a one-week tenure, dealers said. The RBI is seen providing ample liquidity for transmission of easy monetary policy after the 125-basis-points rate cuts in 2025. Significant movement in the rupee may also lend direction, dealers said.

On Monday, the one-day call money rate is likely to open around 5.20%, near the RBI's repo rate of 5.25% due to low liquidity surplus in the system after payments for advance tax for income tax and corporation tax. But inflows of INR 500 billion through the second tranche of open market operations auction Friday will keep the call rate below the repo rate.

GOVERNMENT BONDS

Gilts are not traded on Saturdays. On Monday, bond prices are seen lower after the RBI after the market hours Friday said 21 states will raise INR 584.20 billion at the auction Tuesday. The indicative calendar for state borrowing for Jan-Mar showed states aim to raise INR 438.00 billion Tuesday. Traders will look out for further indications of the RBI purchasing gilts on-screen after data Friday showed it bought gilts worth INR 572.10 billion on-screen in the week ended Mar. 6.

Traders are not carrying heavy positions in gilts, as developments in the West Asia conflict keep them wary 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. The 10-year benchmark 6.48%, 2035 bond is seen in the 6.62-6.75% range. On Friday, the bond ended at INR 98.60, or 6.68% yield.

OIS RATES

Swaps are not traded Saturdays. Monday, swap rates will track Brent crude oil prices for May delivery and US Treasury yields amid the West Asia war. Depending on the movement of Brent crude prices, the five-year swap could rise to 6.55-6.62% if offshore funds continue to pay fixed rates. However, as Indian government bond yields are seen largely cushioned from the impact of the West Asia conflict due to purchases by the RBI, the spread between gilts and swaps will be lucrative to receive fixed rates, dealers said, capping a rise. This spread is expected to correct in the near term, especially since bond yields are seen rising in the onset of fresh supply in April.

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 the Monetary Policy Committee members on further rate action.

The one-year swap rate is seen at 5.62-5.90% and the five-year at 6.15-6.55%. Friday, the one-year swap rate ended at 5.84% and the five-year swap rate at 6.39%.

CALL

The call market is shut Saturday. On Monday, the one-day call money rate is likely to open around 5.20%, near the RBI's repo rate of 5.25% due to low liquidity surplus in the system after payments for advance tax for income tax and corporation tax. But inflows of INR 500 billion through the second tranche of open market operations auction Friday will keep the call rate below the repo rate. On Friday, the three-day call rate closed at 5.15%.

RBI AUCTION

--Nil

LIQUIDITY

--Total net inflows of INR 693.12 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 13.99 billion as coupon on state bonds on Saturday

--INR 30.01 billion as coupon on state bonds on Sunday

--INR 19.49 billion as coupon on 7.62%, 2039 gilt Sunday

--INR 35.37 billion as coupon on 7.19%, 2060 gilt Sunday

--INR 9.62 billion as coupon on state bonds on Monday

--INR 45.25 billion as coupon on 6.19%, 2034 gilt Monday

--INR 39.37 billion as coupon on 6.22%, 2035 gilt Monday

--INR 500.00 billion as payment from RBI's Friday gilt purchases at OMO auction Monday

* Outflows

--Nil

End

US$1 = INR 92.45

Reported by Cassandra Carvalho

Edited by Ashish Shirke

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