Auction Eyed After Dealers Rescued Last Sale

Markets will await the results of the INR 320bn auction later today (details in earlier bullets), participants will look to see demand at the auction after primary dealers were left to rescue the 6.10% 2031 sale taking INR 111bn of the INR 140bn on offer. The weakness at auction was surprising given that this is a new 10-year line. The 5.63% 2026 line up for grabs also suffered a weak auction on July and INR 104bn of INR 110bn sold was devolved on primary dealers. The RBI have not as yet announced purchase plans for the next GSAP operation. The previous purchase focused in illiquid issues but the sale today could be boosted by inclusion of more liquid lines.

• Elsewhere Chief Economic Adviser Subramanian said India's CPI has started showing signs of moderation, and should stay within the central bank's target range. He added that India will not breach its fiscal deficit target of 6.8% government spending is likely to remain high and be froint loaded in order to help support the recovery. Subramanian also said GST collections were likely to rise again, last month Finance Minister Sitharaman said higher tax collections would be the new normal.
• Meanwhile the commerce ministry said India will allow 100% foreign direct in any sale of a state-run company in the oil and gas sector, it was reported in June the government was seeking to sell its 53% stake in Bharat Petroleum.
• Also on the docket today is fiscal deficit data and the eight infrastructure industries indicator, while the RBI will conduct its regular 14-day reverse repo.