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Informist, Friday, Apr. 10, 2026

MUMBAI – Government bond prices and overnight indexed swap rates on Monday are likely to take direction from the movement in oil prices based on developments in West Asia, dealers said. Talks between Iranian and American officials on a lasting peace deal during the two-week ceasefire will begin Saturday.

The outcome of US Vice-President J.D. Vance's meeting with Iranian officials in Islamabad is being closely watched, as are developments between Israel and Lebanon. Dealers entered the weekend hopeful of further de-escalation and a positive outcome from the talks. Money markets are shut Saturday. 

Traders' attention will also be on India's CPI inflation data for March, scheduled at 1600 IST Monday, as it will provide some clarity on the impact of the rise in crude oil prices. Comments from the Reserve Bank of India's rate-setting panel had suggested the bar for rate hikes was higher than traders had earlier priced in, dealers said. An Informist Poll of 13 economists sees CPI inflation climbing to 3.4% in March from 3.21% the previous month.

The one-day call money rate is likely to open at 5.10-5.15% on early demand for funds from primary dealerships. Ample liquidity in the banking system is likely to keep rates near the RBI's Standing Deposit Facility rate throughout the day.

GOVERNMENT BONDS

Monday, bond prices may track the movement of crude oil prices and developments over the weekend related to the West Asia conflict, dealers said. The Brent Crude futures contract for delivery in June has hovered near $95 per barrel since the two warring sides agreed to a two-week ceasefire. Gilts will also track the movement of US Treasury yields after the release of CPI inflation data for March in the US after market hours Friday.

Rate-sensitive short-term bonds may be out of favour, especially if the liquidity surplus rises to INR 5.00 trillion, at which the RBI is likely to conduct another VRRR auction, dealers said. Most dealers do not expect another VRRR until Friday's seven-day operation is reversed.

The movement in overnight indexed swap rates and the rupee may also influence gilts. The yield on the 10-year benchmark 6.48%, 2035 gilt is seen at 6.85-7.10%. On Friday, the bond ended at INR 97.03, or 6.91% yield.

OIS RATES

Swap rates will open Monday tracking crude oil price movement on developments relating to West Asia, dealers said. There is concern about whether the ceasefire between the US and Iran will hold. Significant movement in US Treasury yields will also lend cues to swap rates, dealers said.

The one-year swap rate is seen at 5.70-6.00% and the five-year swap rate at 6.25-6.50%. On Friday, the one-year swap rate ended at 5.83% and the five-year swap rate ended at 5.31%.

CALL

Monday, the one-day call money rate is likely to open at 5.10-5.15% on early demand for funds from primary dealerships. Ample liquidity in the banking system is likely to keep rates near the RBI's SDF rate throughout the day.

The weighted average call rate is expected to be around 5.10% Monday, while the weighted average tri-party repo rate may be 4.80-5.00%. On Friday, the three-day call money rate ended at 4.75%.

RBI AUCTION

--Five states to raise INR 127 billion via bonds 1030-1130 IST Monday

LIQUIDITY

--Total net outflows of INR 306.38 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 14.65 billion as coupon on state bonds Saturday

--INR 8.90 billion as coupon on state bonds Sunday

--INR 10.07 billion as coupon on state bonds Monday

* Outflows

--INR 340.00 billion as payment for gilt auction Monday

End

US$1 = INR 92.73

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

Reported by Aaryan Khanna

Edited by Tanima Banerjee

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