The Hindu Business Line : Bond market weak

The bond market was weak as participants stayed on the sidelines ahead of the Rs 5,000-crore auction of government securities slated for the second half of July and the monetary policy announcement next week. There was a slight slide in prices due to a sell-off, but prices later recovered said dealers. Volumes in the bond market were about Rs 700-800 crore. "Nobody is taking positions ahead of the auction. While the date has not been announced, it is likely that the auction would be held only after the policy announcement on July 25," said a dealer with a private bank. The 7.59 per cent-10 year-2016 benchmark paper opened at Rs 94.9 (8.36 per cent YTM) and closed at Rs 94.87 (8.37 per cent YTM) marginally lower than the previous close of R 94.89 (8.36 per cent YTM). The 9.39 per cent-5 year-2011 paper opened at Rs 106.05 (7.88 per cent YTM) and closed almost unchanged at Rs 106.07 (7.88 per cent YTM).

The 8.07 per cent-11 year-2017 paper opened at Rs 97.53 (8.43 per cent YTM) and closed at Rs 97.50 (8.43 per cent YTM). Market players are divided about a rate hike in the Reserve Bank of India's monetary policy to be out next week. While some market participants ruled out possibility of a rate hike so close to the previous increase, others expect the central bank to mark up short-term rates in order to control inflation, said the dealer.

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