Bond yields eased amid heavy volume after a Reserve Bank of India (RBI) governor indicated that there would be more open market operations to buy debt to help ease tight cash conditions. Subir Gokarn, a deputy governor at the RBI, during an interview said that high liquidity deficit continues to motivate open market operations.
Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the government securities for an aggregate amount of Rs 10,000 crore on February 3, 2012 through multi-security auction using the multiple price method.
On the global front, prices of US government bonds were little changed on Thursday as investors held their breath before crucial US jobs data on Friday and a highly anticipated outcome to Greece's debt swap talks. While, Brent prices rose for a third straight day on Thursday and US crude dropped more than 1 percent in heavy trading that saw the price differential between the two contracts widen close to three-month highs.
The yields on 10-year benchmark 8.79% - 2021 bonds was at 8.10% down 3 basis points from Thursday’ close.
The benchmark five-year interest rate swaps was at 7.26% from previous close on Thursday.
The Government of India has announced the sale of three dated securities for Rs 13,000 crore. The sale (re-issue) of (i) “7.83 percent Government Stock 2018” for a notified amount of Rs 3,000 crore (nominal) through price based auction, (ii) “8.79 percent Government Stock 2021” for a notified amount of Rs 7,000 crore (nominal) through price based auction and (iii) “8.83 percent Government Stock 2041” for a notified amount of Rs 3,000 crore (nominal) through price based auction. The auctions will be conducted using uniform price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on February 3, 2012 (Friday).
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