Our Bureau

Mumbai, Sept 21

After gaining for three consecutive days, the bond market saw a sell off following statements by the US Federal Reserve and the RBI Governor, Dr Y. V. Reddy, which gave an indication of hardening interest rates. Bond prices fell by about 40 paise on Thursday. The total traded volume on the order matching system was Rs 5,900 crore (Rs 8,605 crore).

"The statement by the US Fed chairman was hawkish, due to which the market opened lower. The sell-off continued because Dr Reddy's statement was also bearish. Everyone raised concerns that there could be one more round of rate hike, which spurred profit booking," said a dealer with a private bank. The second calendar of government borrowing, which is yet to be released, is not as much of a concern as earlier, following the softening in oil prices, he said.

The 7.59 per cent - 10 year-2016 paper opened at Rs 99.93 (7.60 per cent YTM) and ended at Rs 99.45 (7.68), down from the earlier close Rs 99.85 (7.61). The 8.07 per cent-11 year-2017 paper opened Rs 102.7 (7.68 per cent YTM) and closed at Rs 102.41 (7.72), lower than the previous close of Rs 102.84 (7.66).

(This article was published in the Business Line print edition dated September 22, 2006)
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