VRR auctions fell to Rs 97,861 crore in May, compared to Rs 13,48,316 crore in January, indicating surplus liquidity
The market expert expects benchmark 10-year bond yields to hover between 7.20 percent and 7.45 percent.
Gilts are expected to consolidate gains with the OMO purchase scheduled today and on anticipation of more purchases lined up in the coming weeks, says Ajay Manglunia, Edelweiss.
ICRA expects the RBI to intervene and address tightness in systemic liquidity in the next quarter through open market operations (OMOs) as the Central Bank ruled out any further relaxation in the daily CRR requirement.
Due to heavy supply in primary auctions this week, the 10-year bond could see selling pressure at higher levels, says Sandeep Bagla, ICICI Securities.
Due to squeeze in liquidity high lending rates will eat away benefits of monsoon. Therefore, GDP growth will depend a lot upon when the monetary policy is dismantled, says Indranil Sengupta, Chief Economist India, BofA ML.
Recent smart outperformance by bond yields post RBI's OMO announcement on August 21 will provide a short term cap on the yield movement, says Dhawal Dalal, DSP BlackRock Invst Managers.
According to Nirmal Bang, rupee may trade in a tight range of 63.10-63.50 during the day. The prospects of some hints of QE tapering in today‘s FOMC minutes will cap any significant gains in the rupee, says the research firm.