Gilts trade cautiously with an eye on OMO • Edelweiss

Gilts trade cautiously with an eye on OMO
• The gilts had a rather quiet session with volumes being very low around INR 120bn as
against recent sessions where volumes have been higher than INR 200bn. After the
disappointment of the RBI measures announced yesterday, markets traded with a mild
negative bias.
• However, the movement and trading aggression was limited as the market was expecting
an OMO announcement post-closing. The 10-Y benchmark traded in a tight range of 8.08-
8.10% and ended the session at the day’s high of 8.10% vs 8.09%. In the event of OMO
expectations coming true, the market would resume its bullish run this week.
• The action in the OIS market was limited to the near-end which reversed its trend and
turned paying. The 1-Y OIS ended the day at 7.76-7.77% vs 7.72-7.78%, while the 5-Y OIS
ended at 7.12-7.20% vs 7.12-7.18%.
Non-SLR Market
Vijaya Bank placed 3M CD worth INR 10bn @ 9.23%. Indian Bank placed 1Y CD worth INR
1.10bn @ 9.59%. HPCL placed 1M CP worth INR 10bn @ 9.09%. Piramal Healthcare Limited
placed September Maturity CP worth INR 5bn @ 9.25%.
Money Market
The liquidity situation was quite similar to the previous session with LAF borrowing around
the INR 1tn mark. Call rates inched closer to the repo rate with WAR for the day being at
8.12% vs 8.15% - deals were struck at low levels of 7.80% as well.

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