The Hindu Business Line : Bond prices gain 45 paise

After losing more than Rs 2 in the past few days, bond prices gained 45 paise today on the back of cut in domestic fuel prices and value buying (traders closed short positions and took fresh positions). Prices gained despite inflation shooting up to 6.73 per cent (6.58 per cent) for the week ended February 3. "The market opened around 10-15 paise higher tracking yields of US T-bills, which moved down by 6-7 basis points. The Fed Governor, Mr Ben Bernanke, did not make any hawkish statement as expected by the market, following which US T-bills rallied," said a dealer at a private bank. According to dealers, trading volumes were low earlier in the day but picked up in the last 30 minutes of trading.

"In the last 30 minutes, traded volumes increased by Rs 500-600 crore," the dealer said. Total traded volumes on the order matching system increased to Rs 2,975 crore (Rs 2,215 crore).

The market expects 10-year paper yield to be in the 8-8.07/08 per cent range next week. Liquidity is expected to be tight, as the first phase of the CRR hike will be effective from February 17. The 8.07 per cent 10-year 2017 paper opened at Rs 100.10 (8.05 per cent YTM) and closed at Rs 100.35 (8.02 per cent), against Rs 99.89 (8.08 per cent). The 7.37 per cent 7-year 2014 paper opened at Rs 96.45 (8.03 per cent YTM) and closed at Rs 96.50 (8.01 per cent) against Wednesday's Rs 96.21 (8.07 per cent).