Bond yields were trading steady as investors preferred being on the sidelines after factors such as the government's bond auction, the Reserve Bank of India's debt buy and surging global oil prices weighed on the sentiment. Traders are waiting government bond auction and open market purchase of bonds results for fresh clues on interest rates and liquidity.
On the global front, US Treasuries prices rose on Thursday as intense bidding at a $29 billion seven-year debt auction spurred buying in the broader bond market, pushing benchmark yields below 2 percent. Meanwhile, Brent crude rose above $124 on Friday, on track for a fifth straight weekly gain, as worries over Iranian supply and upbeat US economic data offset concerns that high oil prices could snuff out demand.
The yields on 10-year benchmark 8.79% - 2021 bonds were steady at its previous close of 8.20% on Thursday.
The benchmark five-year interest rate swaps were up 2 basis points at 7.45% from its previous close of 7.47%.
The Government of India have announced the sale (re-issue) of (i) “8.19 percent Government Stock 2020” for a notified amount of Rs 3,000 crore (nominal) through price based auction, (ii) “9.15 percent Government Stock 2024” for a notified amount of Rs 6,000 crore (nominal) through price based auction and (iii) “8.97 percent Government Stock 2030” 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 24, 2012 (Friday).
Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank of India (RBI) decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on February 24, 2012 through multi-security auction using the multiple price method.