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Our Bureau

Mumbai, Aug. 25

After gaining for two days in a row, bond prices fell on Friday due to profit taking. Another negative for the market was the rumour that the Government might allow oil bonds to be classified as SLR securities, said a dealer with a private bank.

"As oil bonds are of shorter maturity, most banks will prefer to buy these instead of Government securities," he said. Though the market opened higher, a sell off during the day pulled prices down by about 40 paise.

The 7.59 per cent-10 year-2016 paper opened at Rs 97.87 (7.91 per cent YTM) and closed at Rs 97.5 (7.97 per cent YTM) against the previous close of 97.8 (7.92 per cent YTM). The 8.07 per cent-11-year 2017 paper opened at Rs 100.9 (7.94 per cent YTM), touched a low of Rs 100.35 (8.01 per cent YTM) and closed at Rs 100.46 (8 per cent YTM), against the previous close of Rs 100.78 (7.96 per cent YTM). As the liquidity is expected to increase with the redemptions of two Government papers on Saturday and Monday, market participants fear that the RBI may come out with a Market Stabilisation Scheme.

The statement by US Federal Reserve Chairman, Mr Ben Bernanke, which is expected to caution the market about rally in US yields, may also impact the price movement next week.

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