GSAP Operations In Focus

Bonds are expected to be supported today ahead of the RBI's latest GSAP operation later in the session. The RBI will purchase INR 200bn from 8.24% 2027, 7.17% 2028, 7.59% 2029, 7.88% 2030 and 7.57% 2033 lines.

• Aside from the GSAP operation markets await INR 260bn of auctions on Friday where the RBI will tap a new 10-year note. According to Emkay Global the new paper is yielding 6.15% in the when issued market iindicating a much higher coupon cutoff than 5.85%, which is the current benchmark's coupon. They say because of this the RBI may have to buy more than 6t rupees to manage the demand-supply mismatch and keep yields rangebound.
• Elsewhere RBI Governor Das gave an interview to the Business Standard and said the Central Bank is very watchful of the inflation scenario and that should moderate in Q3 if the fiscal year. Das noted growth was the main challenge now, and that higher inflation was transitory.