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Bond yields edge lower on bargain-buying activities on Wednesday

01 Oct 2014 Evaluate

Bond yields were trading lower on Wednesday on account of bargain-buying activities seen after yields rose to 8.52 per cent, its highest level since September 11, on Tuesday. However, the trade was range-bound in absence of any fresh positive triggers. Traders will now watch global factors and rupee momentum for direction.

On the currency front, Indian rupee depreciated to its weakest level since March 4 on Wednesday, tracing the losses of local equities which were on the back of disappointing macro-economic data after September Manufacturing PMI data expanded at its weakest pace in nine months, i.e. since December 2013, for the month of September and after India’s fiscal deficit crossed half the budget estimate (BE) for 2014-15 in the first three months of the financial year.

On the global front, U.S. Treasury prices fell on Tuesday, although month-end buying was seen as stemming weakness as the market stayed within its recent range before Friday's highly anticipated September jobs report. Meanwhile, Brent oil futures edged up to trade near $95 a barrel on Wednesday as a positive Chinese factory survey helped the crude benchmark start October firmer after it fell to its weakest level since 2012 in the previous session.

Back home, the yields on new benchmark 8.40%- 2024 bonds were trading 2 basis points lower at 8.49% from its previous close of 8.51% on Tuesday.

The benchmark five-year interest rate swaps were trading steady at Tuesday’s close of 7.87%.

The Reserve Bank of India has announced the auction of 91 & 364 days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6,000 crore respectively. The auction will be conducted on October 1, 2014 using 'Multiple Price Auction' method.

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