The Hindu Business Line : Securities buoyant

MUMBAI: Buoyed by good liquidity and buying interest following the cancellation of a Rs 8,000 crore auction scheduled for the first week of December, bond prices staged a smart recovery of nearly Rs 2 across some maturities in the Government securities market.

The yield on the benchmark 11-year paper - the 7.38 per cent 2015 - closed softer at 6.87 per cent as against its previous levels at 7.20 per cent.

With a strong rupee and easy liquidity bond prices had moved up during the day, after opening slightly lower than previous close, dealer said.

"Cancellation of two Government securities auctions in a row augurs well for the domestic bond market," said a dealer at a private sector bank.

The 7.38 per cent 2015 paper closed higher at Rs 103.80 after the auction cancellation, prior to which it was trading at Rs 101.45.

The 7.55 per cent 2010 paper closed at Rs 104.90, while it was being dealt at Rs 102.50 before.

"Prices are likely to move upwards on Thursday and stabilise later in the day," said a dealer.

In the Rs 500 crore 91-day Treasury bill auction, the cut-off yield was set at 5.16 per cent, 12 basis points lower than previous level of 5.28 per cent.

Meanwhile, call rates were easy with easily availability of funds. Overnight call money rates in the inter-bank market were in the range of 4.60-4.80 per cent. Under the LAF window, RBI accepted all 17 bids aggregating Rs 4,520 crore in the one-day reverse repo auction.

In the CBLO market, 139 trades worth Rs 6,287.95 crore were transacted in the rate range of 4.55 to 4.85 per cent.