The Hindu Business Line : Bond prices fall

Bond prices fell by around 10-15 paise reacting to the hike in fuel prices. Total traded volumes on the order matching system were at Rs 1,880 crore. Dealers said the fall in bond prices was couched since the hike had been partially factored into the prices. Market participants were, however, wary about a further rise in domestic inflation figures. “We could soon see inflation touching a double digit figure. In such a situation, the RBI might consider hiking interes t rates,” said a dealer at a private bank. The outlook for the bond market remains bearish.

“For bonds, rising inflation, potential RBI action and fiscal slippage may constitute a perfect storm. We see bonds remaining under pressure and expect the 10 year yield to touch 8.25 per cent in the near-term. While SLR demand may preclude a sharp spike in yields, we foresee yields continuing to inch up,” said a research report from ICICI Securities Primary Dealership. The 8.24 per cent- 10 year-2018 paper opened at Rs 100.80 (8.12 per cent YTM) and ended at Rs 100.66 (8.14 per cent YTM), against the previous close at Rs 100.79 (8.12 per cent YTM). The 8.33 per cent- 28 year-2036 paper opened at Rs 98.59 (8.46 per cent YTM) and ended at Rs 98.22 (8.497 per cent YTM), against the previous close at Rs 98.15 (8.50 per cent YTM).

— Our Bureau

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