Bonds yields depict drubbing on last trading day of the current fiscal year
The yields on 10-year benchmark 8.79% - 2021 bonds eased down 9 basis points at 8.52% from its previous close of 8.61% on Thursday
Bonds yields eased substantially on the last trading day of the current fiscal year as traders scrambled to cover short positions after the Reserve Bank of India (RBI) announced surprise buyback of bond through the open market operation (OMO), which included the 10-year benchmark bond yield.
Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 10,000 crore on March 30, 2012 through multi-security auction using the multiple price method.
Bond prices also rose as RBI's surprise move gave rise to hopes that central government would announce more such bond buys in the coming weeks to ease the liquidity and support the market through the huge government borrowing for 2012/13, which is expected to push bond prices up. However, bonds may not rally too much longer given the hefty amount of upcoming debt sales. In the holiday truncated week, the markets will have only two working days would see an outflow of Rs 18,000 crore ($3.51 billion) in government bond supplies next week.
On the global front, US government debt prices rose on Thursday after jobless claims figures undercut optimism about US job growth and Federal Reserve Chairman Ben Bernanke said again the economy's recovery was relatively weak. Meanwhile, Brent crude rose towards $123 on Friday as investors bet on a tighter gasoline market in the world's largest oil consumer during the peak summer driving season and on persistent worries of a supply disruption in the Middle East.
Back on the home turf, the yields on 10-year benchmark 8.79% - 2021 bonds eased down 9 basis points at 8.52% from its previous close of 8.61% on Thursday
The benchmark five-year interest rate swaps was trading lower at 7.51% from its previous close of 7.55% on Thursday.
The Government of India have announced the sale (re-issue) of four dated securities for Rs 18,000 crore on April 3, 2012 (i) “8.19 percent Government Stock 2020” for a notified amount of Rs 4,000 crore (nominal) through price based auction, (ii) “9.15 percent Government Stock 2024” for a notified amount of Rs 8,000 crore (nominal) through price based auction (iii) “8.97 percent Government Stock 2030” for a notified amount of Rs 3,000 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 April 03, 2012.
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