More Stories

Informist, Saturday, Sept. 19, 2026

 

MUMBAI – On Monday, gilt prices and swap rates are seen tracking overnight movements in crude oil prices, with the US yield curve flattening after the US Federal Open Market Committee hiked the fed funds target rate for the first time since 2023, dealers said. 

 

Traders also await the release of the borrowing calendar for state and central government bond issuances for the next quarter and the second half of the current financial year, respectively. The proportion of different bond tenures in the calendar will provide cues on the shape of the gilt yield curve, dealers said. Most traders expect little change in the Centre's plan compared to that in Apr-Sept, though bankers have put forth to the central bank several preferences. The RBI has held several meetings with market participants this month to discuss the Centre's borrowing calendar, they said. Some expect more supply of seven-year bonds, while some expect more 15-year bond supply, while others expect more supply of three- to five-year bonds.

 

Any significant movement in the rupee and swap rates will also lend cues, dealers said. The yield on the 10-year benchmark 6.94%, 2036 bond is seen moving between 7.00% and 7.10%, dealers said. The 10-year benchmark 6.94%, 2036 gilt ended at INR 99.10, or 7.0686% yield Friday.

 

As the US Fed began its rate hike cycle, the RBI's rate-setting panel is seen following suit with a 25-bps repo rate hike in October, dealers said. Traders also expect the RBI to introduce more measures to drain systemic liquidity, beyond the government bond sales it is conducting this month and variable rate reverse repo operations, they said.

 

GILTS

On Monday, gilt prices will track the movement of US yields and crude oil prices at open. Traders will also track the result of the INR-250-billion auction the RBI will conduct to sell gilts through open market operations at 0930-1030 IST. This is the second tranche of the INR-1-trillion OMO sales the central bank had announced for September. The cut-off yields at the OMO auction Thursday were higher than expected, and may rise further at the next auction, as the RBI is seen continuing to sell the entire notified amount of gilts as it did Thursday, dealers said. 

 

Traders expect the 10-year benchmark bond yield to trade in a range of 7.00-7.10% until the Reserve Bank of India's Monetary Policy Committee's meeting next month, if crude prices stay at current levels, dealers said. Several expect the MPC to hike the repo rate by 25 basis points and announce more measures to drain durable liquidity, including expectations of more OMO sales of INR 250 billion or INR 500 billion. A rate hike of 25 bps is already priced into bonds, making for lacklustre trade, dealers said. Some traders find current yields lucrative to buy bonds since the 10-year bond is unlikely to sustain a rise above its May high of 7.14%, they said. 

 

SWAP RATES

On Monday, swap rates are seen tracking overnight movements in crude oil prices, with some traders expecting these prices to move downward in the near-term. Swaps will also track the movement in US Treasury yields, with the US yield curve flattening after the US Federal Open Market Committee hiked the fed funds target rate for the first time since 2023.

 

The one-year swap rate is seen in the range of 5.95-6.15% and the five-year at 6.40-6.70%. On Friday, the one-year swap rate ended at 6.07%, while the five-year swap rate ended at 6.59%.

 

CALL

The one-day call money rate is likely to open near the Reserve Bank of India's repo rate of 5.25% on Monday. However, outflows towards goods and services tax payments beginning Monday are likely to put upward pressure on rates, while outflows related to settlement of the central bank's intervention in the foreign exchange market are likely to continue to drain liquidity, dealers said. Monday is also the last day of the initial public offering of the National Stock Exchange of India Ltd., which is expected to see the highest participation from institutional investors, adding to upward pressure on overnight borrowing rates, dealers said.

 

The RBI will conduct an overnight VRRR of INR 1 trillion Monday. Some market participants expect the RBI to conduct more open market operations auctions to sell gilts after announcing INR 1 trillion worth of such sales for September. Dealers expect the one-day call rate to be at 4.80–5.35% Monday, while the one-day tri-party repo rate is seen at 5.00-5.30%.

 

RBI AUCTION

--Nil  

 

LIQUIDITY

Total net outflows of INR 141.53 billion. The calculation does not take into account redemption of the Standing Deposit Facility and scheduled variable rate repo and variable rate reverse repo operations.

 

* Inflows

--INR 22.20 billion as coupon on state bonds on Sunday

--INR 39.26 billion as coupon on 7.59%, 2029 gilt on Sunday

--INR 36.77 billion as coupon on 7.16%, 2050 gilt on Sunday

--INR 4.55 billion as coupon on state bonds on Monday

--INR 35.06 billion as coupon on 8.28%, 2027 gilt on Monday

--INR 634.11 million as coupon on 8.33%, 2032 gilt on Monday

--INR 2.23 trillion as redemption of three-day variable rate reverse repo tender 

 

* Outflows

--INR 280.00 billion as payments for gilts

 

End

 

US$1 = INR 95.87

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

 

Reported by Meera Nair

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.