As overnight rates were falling well below the policy rate due to extreme liquidity overhang, the auction will suck out excess funds, said Gopal Tripathi, head of treasury at Jana Small Finance Bank. Banks will still be left with surplus cash of about 1.5 trillion rupees to 2 trillion rupees, he said.
“There can be some uptick in yields in the shorter end,” said Puneet Pal, head of fixed income at PGIM Asset Management in Mumbai. He expects the 10-year yield in a range of 6.75-7.10%.
