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Informist, Friday, Apr. 24, 2026

MUMBAI – On Monday, government bond prices and overnight indexed swap rates are seen tracking developments in West Asia and its impact on crude oil prices, dealers said. With no interest rate cues scheduled domestically, traders will also track the movement in the rupee against the dollar.

Traders are on the watch for the likelihood of El Nino and its impact on monsoon this year and the subsequent impact on growth and inflation, they said. The India Meteorological Department sees a 62% chance of El Nino emerging in Jul-Aug, and expects it to persist till the end of 2026.

After state assembly polls end in April, traders will also be on the watch to see if the Centre transmits the recent rise in crude oil prices to consumers by hiking energy prices. However, the Ministry of Petroleum and Natural Gas Thursday clarified that there was no proposal under consideration. Once there is a concrete outcome to the West Asia crisis, traders are likely to refocus on tariffs and trade deals, they said.

On Monday, the one-day call money rate is likely to open at 5.10-5.20%. Dealers expect the call rate around 5.15% during the day, while the tri-party repo rate is expected to be in the range of 4.90–5.15% on the back of ample surplus liquidity in the banking system. Dealers expect the weighted average call rate to be in the range of 5.10-5.15% for Monday, while the weighted average tri-party repo market rate is likely to be in the range of 4.95-5.05%. 

GOVERNMENT BONDS

Gilts are not traded Saturdays. Government bond prices will Monday track developments on US-Iran talks over the weekend and the impact on Brent crude oil prices. Traders will also track the movement in the rupee against the dollar and overnight indexed swap rates.

Traders are on the watch for the likelihood of El Nino and its impact on monsoon this year and the subsequent impact on growth and inflation, they said. The India Meteorological Department sees a 62% chance of El Nino emerging in Jul-Aug, and expects it to persist till the end of 2026.

Value-buying, especially from state-owned banks, is likely to prevent the 10-year gilt yield from rising above 7.00%, with traders expecting the US-Iran peace deal to be inevitable, even if delayed, dealers said. However, profit-booking, which is again expected from state-owned banks, is likely to limit any fall in the 10-year benchmark yield below 6.90%, dealers said. The yield on the benchmark 10-year 6.48%, 2035 bond is seen in a range of 6.90-7.05%. On Friday, the 10-year benchmark 6.48%, 2035 gilt ended at INR 96.87, or 6.9365% yield. 

OIS RATES

Money markets are shut Saturday. On Monday, traders will track developments in the West Asia war and their impact on crude oil prices, dealers said. There are no interest rate cues scheduled domestically and swap rates will be very sensitive to global developments, they said. Progress on negotiations between the US and Iran is expected to drive down swap rates, with the five-year swap rate seen at around 6.40% if Brent crude futures subside below $100 a barrel.

The one-year swap rate already priced in three 25-bps repo rate hikes by April next year, which will bring the repo rate to 6.00%. Some traders were looking to receive fixed rates as they believed the MPC will not raise the repo rate that much unless the West Asia conflict drags on, dealers said. However, most traders avoided view-based positions due to uncertainty over the war and negotiations between the US and Iran on a peace deal, they said. 

Some traders also looked ahead to the rate decision and commentary from the US Federal Open Market Committee at next week's policy meeting, which may influence offshore activity in India's OIS market. Dealers expect the US rate-setting panel to hold interest rates steady. Fed fund futures are pricing in no change to the federal funds rate next week as inflation in the world's largest economy remains sticky, according to the CME FedWatch tool. On Friday, the one-year swap rate ended at 5.88%, while the five-year swap ended at 6.47%.

CALL

On Monday, the one-day call money rate is likely to open at 5.10-5.20%. Dealers expect the call rate to be around 5.15% during the day, while the tri-party repo rate is expected to be in the range of 4.90–5.15% on the back of ample surplus liquidity in the banking system. Dealers expect the weighted average call rate to be in the range of 5.10-5.15% for Monday, while the weighted average tri-party repo market rate is likely to be in the range of 4.95-5.05%.

Dealers said the rates in the overnight market will not rise above the repo rate as demand for funds from banks for the next two or three sessions is unlikely. The weighted average call rate will be around 5.15% and the weighted average rate in the tri-party repo market is likely to be in the band of 4.95-5.05% for the first half of next week. Rates in the overnight market are expected to rise in the later part of the week if the government's month-end spending does not begin by Wednesday as banks will need funds for the fortnight end on Apr. 30, they said. Friday, the three-day call rate ended at 5.11%.

RBI AUCTION

--Nil 

LIQUIDITY

Total net outflows of INR 185.71 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 13.53 billion as coupon on state bonds on Saturday

--INR 8.98 billion as coupon on state bonds on Sunday

--INR 38.98 billion as coupon on 7.72%, 2055 gilt on Sunday 

--INR 17.65 billion as coupon on state bonds on Monday 

--INR 55.15 billion as redemption of state bonds on Monday

* Outflows 

--INR 320.00 billion as payment for gilts on Monday

End 

US$1 = INR 94.25

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

Reported by Shumaila Firoz

Edited by Akul Nishant Akhoury

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