Dharamraj Dhutia

The Indian rupee's outlook and government bond movements this week will hinge on the U.S. Federal Reserve's commentary following a widely anticipated rate cut, as well as the quantum of overseas flows.

Two Indian infrastructure investment trusts (InvITs) plan to raise a total of over 26 billion rupees ($297 million) through debut bond issues between October and November, according to banking sources, joining a growing list of such vehicles tapping the debt market for fundraising.

A decline in corporate bond yields in secondary market after a dovish monetary policy, encouraged three state-run firms to raise about 77.50 billion rupees ($880.5 million) through bonds sale, three merchant bankers aware of the matter said on Friday.

India's corporate debt market is witnessing a rebound as renewed bets of steep rate cuts boost demand and encourage firms to opt for bonds over traditional funding sources, analysts say.

Indian mutual funds expect inflows into short- and medium-term debt schemes to pick up in the coming months after September's outflows hit a six-month high, as renewed rate cut expectations lift sentiment, according to fund managers.

The Indian rupee is likely to respond this week to the fallout from renewed U.S.-China trade tensions, with support from the central bank, while government bonds will take cues from domestic inflation print and demand-supply dynamics.

India's largest bank is set to return to the rupee debt market after a year with plans to raise funds through Basel III-compliant tier II bonds this month, three sources familiar with the matter said on Friday.

The rupee may find modest relief this week on the back of inflows expected on account of two large initial public offerings, while bond yields may ease due to a lower-than-expected state debt issuance calendar for this quarter.

Indian billionaire Gautam Adani's flagship firm is slated to raise up to 10 billion rupees ($112.6 million) through the private placement of two-year and six-month bonds, two bankers said on Monday, marking its first such fundraising since 2023.

The Indian rupee and government bonds will take cues from the Reserve Bank of India's policy decision this week, while the currency is also likely to rely on the central bank intervention for support as it grapples with persistent headwinds.