Money & Banking

Bond prices a tad lower

Our Bureau Mumbai | Updated on March 17, 2011

Bond prices weakened during the day after the RBI hiked key interest rates in the monetary policy. However, prices recovered towards the end of trade and closed flat compared with the previous levels. According to a dealer with a public sector bank, it was merely a knee jerk reaction to the rate hike. The food inflation figures that came in were also slightly better. This too helped to improve the overall sentiment in the bond market. “The policy was on expected lines. The market had already factored in a 25 basis points hike,'' the dealer said. The total traded volumes on the order matching system were to the tune of Rs 7,420 crore.

The most actively traded 8.08 per cent -11-year-2022 paper opened at Rs 100.05 (8.07 per cent YTM) and closed at Rs 99.99 (8.08 per cent YTM), at the same yields as the previous close. The second most actively 7.99 per cent – 6-year-2017 paper opened at Rs 100.41 (7.9 per cent YTM) and closed at Rs 100.21 (7.94 per cent YTM). For the remaining part of the fiscal bond yields are likely to remain more or less at the current levels. Another comfort factor is that there is no fresh auction scheduled until March end, the dealer said. However, liquidity continues to be a concern as its easing is subject to the government's spending, the dealer added.

Published on March 17, 2011

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