The Hindu Business Line : Bond prices fall

Bond prices fell by around 45 paise on concern over higher inflation numbers and tight liquidity conditions. Total traded volumes on the order matching system were at Rs 5,220 crore (Rs 4,260 crore). Dealers said that domestic inflation, which was at 7.83 per cent for the week ended May 3, was much higher than the market expectation of 7.5 per cent. “The revision of the inflation number for the week ended March 8 from 5.92 per cent to 7.78 per cent also sparked concerns that inflation numbers may even be underestimated,” said a dealer at a private bank.

Liquidity in the system also remained under pressure, as the RBI lent Rs 20,705 crore to banks through the repo window. A scheduled auction of Rs 10,000 crore next week will further keep cash scarce, traders said. The 8.24 per cent-10 year -2018 paper opened at Rs 102.45 (7.88 per cent YTM) and ended at Rs 101.99 (7.94 per cent YTM), against the previous close at Rs 102.46 (7.88 per cent YTM). The 7.59 per cent-8 year-2016 paper opened at Rs 97.71 (7.98 per cent YTM) and ended at Rs 97.60 (8 per cent YTM), against the previous close at Rs 97.82 (7.96 per cent YTM).

— Our Bureau

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