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Informist, Saturday, Apr. 4, 2026

MUMBAI – Government bond prices are likely to open steady Monday ahead of the Reserve Bank of India's Monetary Policy Committee's meeting outcome due Wednesday, dealers said. Gilts will also track overnight crude oil prices and developments in West Asia over the weekend. Overnight indexed swap rates will also track crude oil prices and the movement of bond yields. 

The one-day call money rate on Monday is likely to open below the RBI's repo rate of 5.25% and is expected to fall below the RBI's Standing Deposit Facility rate of 5.00% during the day due to comfortable liquidity surplus in the banking system. During the day, the call money rate is expected to move in a range of 4.90-5.15%, dealers said. 

GOVERNMENT BONDS

On Monday, bonds may open steady as the three-day Monetary Policy Committee meeting begins. Gilt yields may also track the movement of Brent crude oil futures and developments in West Asia over the long weekend, dealers said.

Due to the rate cues coming from the war, and after the Centre published its borrowing calendar for Apr-Sept, traders expect the bond yield curve to "bear-flatten", they said. Foreign portfolio investors may continue selling fully accessible route bonds, pulling down prices. 

The 10-year benchmark 6.48%, 2035 bond is seen in the range of 6.95-7.20% Monday. On Thursday, the bond ended at INR 95.55 or 7.1329% yield, with the 10-year benchmark yield ending at its highest closing level since May 2024.

OIS RATES

On Monday, swaps will track Brent crude oil prices and the movement in US Treasury yields over the weekend, dealers said. Traders expect swap rates to open steady if there is no escalation in the ongoing war in West Asia, they said. The movement in government bond yields may also lend a direction after the 10-year benchmark gilt yield ended at 7.1329%, the highest closing level since May 8, 2024.

If offshore traders continue paying fixed rates, the five-year OIS rate is on track to test 7.00%, its highest level since October 2022, dealers said. If crude oil price drops to near $80 per barrel if the war in West Asia ends, the five-year swap could ease to as low as 6.25% as a fall triggers stop-losses on paid fixed-rate positions. Some traders expect rates to remain above pre-war levels even if oil prices fall, dealers said.

The one-year swap rate is seen at 6.00-6.45% and the five-year at 6.45-7.00% Monday. On Thursday, the one-year swap rate ended at an over 14-month high of 6.37%. The five-year swap rate ended at 6.87%, its highest closing level since October 2023.

CALL

On Monday, the one-day call money rate is likely to open below the RBI's repo rate of 5.25%, but above Thursday's close of 4.75% due to early demand for funds from primary dealerships. During the day, the call rate is likely to fall below the RBI's Standing Deposit Facility rate of 5.00% level due to comfortable liquidity surplus in the banking system. During the day, the call money rate is expected to move in a range of 4.90-5.15%. Dealers expect the tri-party repo rate to remain below the RBI's SDF rate. 

Dealers expect liquidity surplus in the banking system to rise by INR 500 billion to INR 700 billion on Friday due to inflows of month-end government expenditure. Traders will track the liquidity figures amid outflows for payments of excise duty and tax deducted at source scheduled on Tuesday.

RBI AUCTION

--Nil

LIQUIDITY

--Total net outflows of INR 239.85 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 8.68 billion as coupon on state bonds Monday

--INR 41.47 billion as coupon on 6.48%, 2035 bond Monday

* Outflows

--INR 290.00 billion as payment for gilts Monday.

End

US$1 = INR 93.10

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

Reported by J. Navya Sruthi

Edited by Tanima Banerjee

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