OIS rates range-bound after Tuesday rally

Overnight indexed swaps were largely flat, pausing from their sharp rallies on Tuesday, as traders pared down rate cut expectations after RBI maintained its hawkish stance.

The 1-year OIS rose 1 bp to 7.73 percent, while the longer-end five-year OIS rate fell 1 bp to 7.09 percent.

RBI said that cut in the SLR announced on Tuesday will provide a future cushion if liquidity deficit surges. Currently, liquidity remains within RBI's comfort zone and will not warrant further OMOs, dealers said.

ICICI Securities PD says front-end of the swap curve looks ripe for an upward move as RBI is believed to be gearing for continued liquidity deficit.