RBI: According to research by HSBC Asset Management, the Reserve Bank of India is anticipated to use open market operations (OMOs) to inject liquidity of between Rs 1.5 lakh crore and Rs 2.5 lakh crore during the first quarter (January–March) of the year 2026.

According to the estimate, the RBI may carry out further OMOs totaling between Rs 2 lakh crore and Rs 3 lakh crore over the remainder of 2026. The degree of foreign currency asset accumulation or depletion on the central bank’s balance sheet would primarily determine this.

It said “We expect 1.5-2.5 lakh cr of OMO in Q1 2026, with potentially another 2-3 lakh cr OMO in the rest of the calendar year”

The government bond market might be supported by such a liquidity influx, according to the paper, which could favorably influence the demand-supply dynamics of central government assets.

It made clear that any confirmation of India’s inclusion in the Bloomberg Global Aggregate Index for the first quarter of 2026 may be a significant catalyst for the bond markets. Foreign portfolio investor (FPI) inflows of $15–20 billion might result from this inclusion, which would provide government securities with a highly favorable technical environment.

According to the study, macroeconomic fundamentals are still generally favorable for maintaining stable and lower interest rates for an extended period of time. Nonetheless, dangers still arise from changes in the global environment and the external sector.

HSBC anticipates that as the easing cycle draws to a close, fixed-income markets will consolidate, exhibiting broad trading ranges and increased volatility, as market players turn their attention to the timing of a reversal in the present accommodating monetary policy.

One of the main concerns raised by the study was the rupee’s trajectory. It said that the RBI has had to do a difficult balancing act in controlling the currency in 2025 because to pressure on the rupee from increased dollar demand, a growing trade imbalance, and capital outflows.

An early trade agreement with the US is still a major aim as it may provide India an advantage over other exporters.

According to HSBC, the rupee has traditionally seen significant depreciation every two to three years, often as a result of significant international events. The currency usually stabilizes during the next years in accordance with domestic macroeconomic fundamentals after such crises.

The analysis said that India is probably nearing the end of the severe depreciation, with the rupee forecast to settle into a more steady range through the remainder of 2026, even if it is impossible to pinpoint the precise top of the present weakening period.