The Hindu Business Line : Bond prices fall

Bond prices fell after the release of the inflation data, which was worse than expected. Total traded volumes on the order matching system was Rs 3,360 crore (Rs 2,840 crore). For the week ended September 30, the rate of inflation was at 5.16 per cent against 4.77 per cent in the previous week.

Market participants said the higher cut-off yields in the auction of the 7.59 per cent-2016 paper caused a drop in bond prices. The rise in the US yields to 4.80 per cent (4.74) also dampened sentiment in the bond market, dealers said. The 7.59 per cent-10 year-2016 paper opened at Rs 99.95 (7.60 per cent YTM) and closed at Rs 99.63 (7.64 per cent YTM), against Thursday's Rs 99.90 (7.60 per cent YTM). The 8.33-30 year-2036 paper, which was auctioned on Friday, opened at Rs 102.46 (8.11 per cent YTM) and closed at Rs 102.50 (8.10 per cent YTM).

The auctions of the 7.59-Government Stock 2016 and the 8.33-Government Stock 2036 were oversubscribed on Friday. Dealers said the cut-off yield was higher than expected. For the 7.59 paper, the notified amount was Rs 6,000 crore. The Reserve Bank of India received 193 competitive bids amounting to Rs 10,569 crore. The cut-off price was Rs 99.71 (7.63 per cent YTM). The RBI accepted 141 bids, amounting to Rs 5,977.25 crore. The partial allotment percentage amounted to 28.52 per cent from three bids. The weighted average price was Rs 99.90. The RBI also received and accepted 18 non-competitive bids, amounting to Rs 22.74 crore. For the 8.33 paper, the notified amount was Rs 3,000 crore. The RBI received 121 competitive bids amounting to Rs 6,901.8 crore. The cut-off price was Rs 102.50 (8.10 per cent YTM). The RBI accepted nine competitive bids amounting to Rs 2,982.12 crore. The partial allotment percentage amounted to 8.92 per cent from two bids. The weighted average price was Rs 102.97. The RBI also received and accepted 19 non-competitive bids amounting to Rs 17.88 crore.