The Hindu Business Line : Bond prices continue to rally

Bond prices rallied by over 30 paise for the second consecutive day on Tuesday. Market participants expect the US Federal Reserve to pause the hike in interest rate cycle. "The market will watch for the Fed meeting tomorrow which may hint at the interest rate policy in the US," said a dealer at a private bank.

The total traded volumes were about Rs 5,400 crore (Rs 4,015 crore). "Mr P. Chidambaram, Union Finance Minister, said the domestic interest rates may soften if the oil prices continue to be moderate and the inflation is under control. This pushed up prices in the bond market," said the dealer.

Tight liquidity due to advance tax flows continued to impact bond prices. The 7.59-per cent 10-year 2016 paper opened at Rs 98.74 (7.77 per cent YTM) and closed at Rs 99.07 (7.73 per cent YTM), higher than Monday's close at Rs 98.74 (7.778 per cent YTM). The 8.07-per cent 11-year 2017 paper opened at Rs 101.70 (7.82 per cent YTM) and ended at Rs 102.04 (7.77 per cent YTM), higher than Monday's close at Rs 101.72 (7.82 per cent YTM).

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