Bond yields were trading lower on account of bargain buying activities, which pushed the bond prices higher. However, the trade was widely range-bound on account of prevailing caution ahead of the release of borrowing calendar, while oil price movements also were being closely eyed by traders.
In a related development, foreign institutional investors, or FIIs, have stepped up investments in long-term government bonds with maturities extending up to 28-30 years, having exhausted nearly 65% of the $5-billion investment limit for long-term investors such as foreign central banks, pension funds, sovereign wealth funds, endowment funds and insurance funds.
On the global front, U.S. Treasury debt prices rose on Friday as traders took advantage of a recent rise in yields to do some bargain hunting following a week dominated by Federal Reserve policymakers and a failed referendum that could have broken up Britain. Meanwhile, brent crude fell below $98 a barrel on Monday, down for the third session in four, as sluggish demand and ample supplies outweighed a possible cut in oil output from the Organization of the Petroleum Exporting Countries (OPEC).
Back home, the yields on new benchmark 8.40%- 2024 bonds were trading 2 basis points lower at 8.43% from its previous close of 8.45% on Friday.
The benchmark five-year interest rate swaps were trading 4 basis points lower at 7.83% from its previous close of 7.87% on Friday.
The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 7,000 crore and Rs 5000 crore respectively. The auction will be conducted on September 24, 2014 using 'Multiple Price Auction' method.