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Informist, Monday, Apr. 13, 2026

MUMBAI – Government bond prices and overnight indexed swap rates will track the movement in oil prices Wednesday based on developments in West Asia, dealers said. Post market hours Monday, US President Donald Trump, in a post on his social media site TruthSocial, said that if Iran's "fast attack ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED, using the same system of kill that we use against the drug dealers on boats at sea." Trump claimed that Iran's navy is lying at the bottom of the sea, completely obliterated.

India's financial markets will remain shut Tuesday for Ambedkar Jayanti. 

On the domestic front, traders will also track systemic liquidity and the Reserve Bank of India's liquidity management, dealers said. The liquidity surplus is seen north of INR 5.00 trillion this entire week amid bond redemptions and a lack of major outflows. Traders are divided over whether the central bank will conduct a variable rate reverse repo auction this week. A few dealers said the RBI could come up with a VRRR for INR 1 trillion–INR 2 trillion for a tenure of up to four days, not longer, with payment for goods and services tax scheduled at the beginning of next week. Others said the central bank would only consider a rollover when the seven-day auction conducted Friday is due for reversal.

After India's CPI inflation for March, released Monday, was in line with expectations at 3.4%, the print re-affirmed traders' bets that the Reserve Bank of India's Monetary Policy Committee is unlikely to hike the repo rate at its next meeting in June. However, traders are wary of inflation in later months, if Brent crude for June delivery hovers near $100 per barrel and the Centre begins passing on the rise in fuel prices to consumers, dealers said. 

Wednesday, the one-day call money rate is likely to open at 5.10-5.15% on early demand for funds from primary dealerships and banks. Dealers expect the rate to be on the higher side--closer to the repo rate--due to requirement for funds for the reporting fortnight ending Wednesday. The call rate is expected to be in the range of 4.65-5.25% Wednesday on the back of ample liquidity in the banking system. The weighted average call rate is expected to be     around 5.10%, while the weighted average tri-party repo rate may be 4.80-5.05%.

GOVERNMENT BONDS

Wednesday, bond prices may track the movement of crude oil prices and developments related to the conflict in West Asia, dealers said. Traders are betting that the US-Iran ceasefire will continue to hold and the yield on the 10-year benchmark bond is unlikely to rise above 7.00%, making current levels attractive to buy bonds, dealers said. Though Iran and the US failed to make headway in negotiations over the weekend, the geopolitical risk is already priced into bonds, they said. Most traders say that the 10-year benchmark 6.48%, 2035 bond yield has scope of falling till 6.80%, after a tame inflation print in March. Some traders are wary of the RBI and MPC's commentary, after the central bank conducted a VRRR Friday, a few days after Governor Sanjay Malhotra had seemingly indicated that the RBI would give banks liquidity comfort in times of uncertainty. 

Traders will also assess data from Clearing Corp. of India, which showed that the 'Others' segment of bond market participants—which includes insurance companies, provident funds, and the RBI—were the largest net buyers of gilts Monday, a day when the turnover in the 10-year 6.48%, 2035 bond was 69% of the total turnover of INR 562.60 billion in the government securities market. Some speculate that the RBI purchased the bond on-screen. 

There were no surprises in India's CPI inflation for March, released Monday, reinforcing bets that the RBI's Monetary Policy Committee is unlikely to find reason to raise the repo rate in June, dealers said. Traders have mixed views on rate-sensitive short-term bonds, with some preferring these tenures due to their lucrative yield spreads over overnight borrowing rates, while others fear the RBI is likely to drain liquidity through another variable rate reverse repo auction amid surplus liquidity, they said. Most dealers do not expect another VRRR until the one conducted Friday 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 6.80-7.00%. On Monday, the bond ended at INR 96.85, or 6.94% yield.

OIS RATES

Swap rates will Wednesday track the movement of crude oil prices and US Treasury yields amid developments relating to West Asia, dealers said. There is concern about whether the ceasefire between the US and Iran will hold, with the former planning to embargo ships from Iranian ports starting 1930 IST Monday. However, as geopolitical risk gets priced in, offshore traders and some domestic traders are likely to be on the receiving side in swaps, pulling rates lower. Non-deliverable OIS rates traded slightly below onshore rates Monday. Traders will also track systemic liquidity. The one-year swap rate is seen at 5.70-6.00% and the five-year swap at 6.25-6.50%. On Monday, the one-year swap rate ended at 5.84% and the five-year swap rate ended at 6.36%.

CALL

Wednesday, the one-day call money rate is likely to open at 5.10-5.15% on early demand for funds from primary dealerships and banks. Dealers expect the rate to be on the higher side--closer to the repo rate--due to requirement for funds for the reporting fortnight ending Wednesday. The call rate is expected to be in the range of 4.65-5.25% Wednesday on the back of ample liquidity in the banking system. The weighted average call rate is expected to be around 5.10%, while the weighted average tri-party repo rate may be 4.80-5.05%. On Monday, the two-day call money rate ended at 5.10%.

RBI AUCTION

--RBI to auction 91-day T-bills worth INR 120 billion on Wednesday

--RBI to auction 182-day T-bills worth INR 60 billion on Wednesday

--RBI to auction 364-day T-bills worth INR 60 billion on Wednesday

LIQUIDITY

--Total net outflows of INR 7.34 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 12.18 billion as coupon on state bonds Tuesday

--INR 9.65 billion as coupon on state bonds Wednesday

--INR 42.30 billion as coupon on 7.23%, 2039 gilt Wednesday

--INR 55.55 billion as coupon on 6.90%, 2065 gilt Wednesday

* Outflows

--INR 127.00 billion as payment for state bonds Wednesday

End

US$1 = INR 93.3750

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

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

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