The Hindu Business Line : Bonds up on positive sentiments

Bond prices rose on sentiments as market participants expect the Government to survive the no-confidence vote in Parliament on Tuesday. The RBI announcing the auction of a 10-year government paper, instead of a 19-year paper, as was announced earlier, was also seen as positive by the market, said dealers. Total volumes on the order matching system were lower at Rs 2,910 crore (Rs 3,945 crore). The 8.24 per cent-10 year-2018 paper opened at Rs 94.6 (9.08 per cent YTM) and t ouched a high of Rs 95.6 (8.92 per cent YTM). It closed at Rs 94.77 (9.05 per cent YTM), higher from the earlier close of Rs 94.54 (9.02 per cent YTM). The 8.28 per cent-24 year-2032 paper opened at Rs 85.9 (9.28 per cent YTM) and closed at Rs 86.58 (9.74 per cent YTM). Mr Srinivasa Raghavan, Vice-President and Head – Treasury, IDBI Gilts, said the market is expecting the government to win the no-confidence vote tomorrow. “There may be some loss as an initial reaction. The market may fall temporarily, but it will stabilise and gain later in the day,” he said. According to Mr Raghavan, in case the Government falls, the yield on the 10-year benchmark security may rise by about 10 basis points, and touch 9.15-9.20 per cent. But if the Government wins, the yield may fall to 9 per cent. “The broad range is likely to be 9-9.20 per cent. In a market that is already volatile this is not a very big movement,” he said.

— Our Bureau

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