The Hindu Business Line : Sharp fall in bond prices

Bond prices fell by over Re 1 on higher oil prices and tight liquidity. A bond dealer with a public sector bank said that market participants were unwilling to take trading positions due to liquidity concerns. “Whenever there is Reserve Bank intervention in the forex market, it induces tightness in liquidity,” he said. The advance tax outflow is also another reason for the shortage of surplus funds, but this will ease once the government starts spending, the de aler added. On Thursday, banks borrowed a total of about Rs 75,000 crore from RBI. Oil prices touched $99 for a barrel. Total traded volumes on the order matching system were lower at Rs 3,335 crore (Rs 5,715 crore). The 8.24 per cent-10 year-2018 paper opened at Rs 100.01 (8.24 per cent YTM) and closed at Rs 99 (8.39 per cent YTM), against the previous close of Rs 100.3 (8.19 per cent YTM). The 8.24 per cent-19 year-2027 paper opened at Rs 96.83 (8.58 per cent YTM) and closed at Rs 94.6 (8.84 per cent YTM), against the previous close of Rs 96.95 (8.57 per cent YTM). “The money market will remain tight for some time and spreads will remain high. There will be not much appetite among traders,” said the dealer.

— Our Bureau

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