The Hindu Business Line : Bond prices drop by over Re 1

Bond prices fell sharply by over Rs 1, as inflation touched 11.05 per cent. Most market participants were anticipating inflation to be around 9.5-10 per cent. While the higher than expected inflation took the bond market by surprise, it has also strengthened expectations of another rate hike by the Reserve Bank of India. Total traded volumes on the order matching system were Rs 2,495 crore (Rs 3,365 crore). There was an auction of Rs 6000 crore government security, which also dampened market sentiments. It partially devolved on primary dealers as the yields were not attractive, said traders. This, however, helped bond prices recover towards close. The low bond prices also attracted investor interest, as they were good levels to buy for SLR requirements, said a bond dealer with a private bank. Mr S. S. Raghavan, President and Head - Treasury, IDBI Gilts Ltd, said, "The short term yields are the ones really getting hit. Probably the market feels that a rate hike by the RBI will be immediate and may happen before the policy announcement in July." The 8.24 per cent -10 year-2018 benchmark paper opened at Rs 98.4 (8.48 per cent YTM) and touched a low of Rs 97.11 (8.68 per cent YTM). It ended trade at Rs 97.45 (8.63 per cent YTM) against the previous close of Rs 98.45 (8.47 per cent YTM). The 6.57 per cent -3 year-2011 paper opened at Rs 93.90 (8.92 per cent YTM) and closed at Rs 93.5 (8.97 per cent YTM), against the previous close of Rs 95.20 (8.61 per cent YTM). - Our Bureau

More Stories on : Debt Market

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Investment banking venture

Forex reserves slump by $4.9 b

TCS, Infosys post slower EVA growth

Rupee rises on RBI intervention

NHB in talks with insurers

GIC signs pact with Hannover Re

United India micro office

Plea on health insurance

Bond prices drop by over Re 1

SEBI move on debt investment limits

SEBI clears Exchange Traded Currency Futures

ICICI Bank to focus on pvt banking

IOB-Sampoorna scheme extended

Case for hike in lending rates

PSBs to wait for RBI signals

Call rates end sharply lower