The Hindu Business Line : Bond prices up marginally

The bond market was volatile with the price of the benchmark 10-year paper moving in a band of 30 paise. Though the market saw buying in the morning, there was a sell off on talks that oil bonds may be given the status of Statutory Liquidity Requirement securities. There were also talks that the government may allow conversion of recapitalisation bonds into SLR bonds, said dealers.

"The fear is that this will lead to an increase in the supply of bonds with a corresponding drop in demand for government securities from banks," said a bond dealer. The 7.59 per cent-10 year-2016 paper opened at Rs 97.65 (7.94 per cent YTM) to touch a high of Rs 97.78 in day trade. It then fell to Rs 97.47 before closing at Rs 97.6 (7.95 per cent YTM), a tad higher than Friday's close of Rs 97.50 (7.97 per cent YTM). The 8.07 per cent-11-year 2017 paper opened at Rs 100.75 (7.96 per cent YTM), dropped to Rs 100.36 before ending at Rs 100.49 (7.8 per cent YTM), higher than Friday's close of Rs 100.46 (8 per cent YTM). The market is now awaiting the US customer confidence data and auction of government securities to be held in September, said the dealer. As per RBI's auction calendar, a total of Rs 9,000 crore worth securities is scheduled in the period September 4-12.