The Hindu Business Line : Bond prices gain

The bond market gained as it found support on expectations of weak US Consumer Price Index data, scheduled to be released later on Wednesday. The bonds recovered the losses on account of the auction announcement, said dealers. The fall in oil prices also gave the market some comfort, dealers added. The yields on the 10-year benchmark reached 8.09 per cent. "If the CPI data is as expected or worse, yields may touch 8.04-05 per cent. But profit booking is likely at these levels," said a dealer with a private bank. On the higher side, the yields may touch 8.13 per cent, he said.

About liquidity, the dealer said while there is some tightness in short term, considerable hardening in the long term seems unlikely, because the auctions under the RBI's LAF are comfortable. The 7.59 per cent-10 year-2016 paper opened at Rs 96.45 (8.12 per cent YTM) and closed at Rs 96.66 (8.09 per cent YTM) against Monday's close of Rs 96.36 (8.14 per cent YTM). The market was closed on Tuesday due to Independence Day. The 9.39 per cent-5 year-2011 paper opened at Rs 106.68 (7.72 per cent YTM) and closed at Rs 108.80 (7.69 per cent YTM) against Monday's close of Rs 106.59 (7.74 per cent YTM).