The Hindu Business Line : Bonds range-bound

The bond market was range-bound because of apprehension over the sub-prime lending crisis in the US. The market opened negative with yields on the 10-year benchmark touching 8 per cent. A dealer with private bank said that traders sold during the earlier part of the day on fears that FII money may go out of the country, leading to a liquidity shortage. But when the equity market recovered, bond prices too recovered and closed at almost the same levels as on Thursday.

Inflation was higher at 4.45 per cent for the week ended July 27 against 4.36 per cent in the earlier week. The 7.49 per cent 10-year benchmark paper opened at Rs 96.70 (7.98 per cent YTM), touched a low of Rs 96.57 (8 per cent YTM) and closed at Rs 96.71 (7.98 per cent YTM) against the previous close of Rs 96.67 (7.99 per cent YTM). The 7.99 per cent, opened at Rs 100.19 (7.96 per cent YTM) and closed at Rs 100.17 (7.96 per cent YTM) against the previous close of Rs 100.12 (7.97 per cent YTM).

After trade on Friday, the RBI announced the auction of the 5.48 per cent, 2009 paper for Rs 4,000 crore under the market stabilisation scheme, to be held on August 16. Most dealers felt that as this amount was not very high, the bond market may not react in a negative manner on Monday. –

Our Bureau