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Our Bureau

Mumbai, May 23

Bond prices on Wednesday fell by around 20 paise ahead of the Rs 8,000-crore government security auction on Friday. Total traded volumes on the order-matching system were at Rs 2,090 crore (Rs 2,280 crore). "Prices fell as traders were pruning their positions ahead of the auction," said a dealer at a private bank.

Market participants said bond redemptions worth over Rs 21,000 crore next would shore up cash in the system. "Dealers are wary of what measures the RBI would use to drain out cash from the system. Rumours of a possible hike in the cash reserve ratio also dampened sentiment," said a trader. The 8.07 per cent - 10 year-2017 paper opened at Rs 99.70 (8.11 per cent YTM) and closed at Rs 99.54 (8.14 per cent YTM), lower than the previous close of Rs 99.73 (8.11 per cent YTM). The 7.49 per cent-10 year-2017 paper opened at Rs 95.56 (8.15 per cent YTM) and closed at Rs 95.40 (8.17 per cent YTM), down from Tuesday's close of Rs 95.56 (8.15 per cent YTM).

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