The Hindu Business Line : Bond prices down 60 paise

Bond prices fell by over 60 paise reacting to the high inflation numbers. Total traded volumes on the order-matching system were at Rs 5,795 crore (Rs 4,380 crore). Dealers said that there was all round selling of bonds during the day. "Market participants expected domestic inflation to be around 6.62 per cent. So, it came as a real shock when it was revealed to be 7 per cent. Monetary action now seems inevitable," said a dealer at a private bank.

The yield on the 10-year paper hardened by around 10 basis points during the day. The outlook for the bond market remains negative. "There is a scheduled auction for Rs 10,000 crore next week. The RBI could additionally have Market Stabilisation Scheme auctions since there is much surplus liquidity in the system," said another dealer.

The 7.99 per cent-9 year-2017 paper opened at Rs 100.77 (7.87 per cent YTM), touched an intra-day high of Rs 100.87 (7.85 per cent YTM) and then fell to close at Rs 100.05 (7.98 per cent YTM). On Thursday, the paper had closed at Rs 100.64 (7.89 per cent YTM). The 8.33 per cent-28 year-2036 paper opened at Rs 98.80 (8.44 per cent YTM, touched a high of Rs 98.80 (8.44 per cent YTM) and closed at Rs 97.70 (8.54 per cent YTM).- Our Bureau

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