Bond yields hardly reacted to the release of flat factory output July figures as the market is not expecting any action from the Reserve Bank of India (RBI) in the upcoming mid-quarter monetary policy review on September 17, 2012. Continuing to put forth dismal performance, India’s index of industrial production (IIP), a key measure of industrial output registered a negligible growth of 0.1 per cent in July 2012, way lower than growth rate of 3.7 percent in the corresponding period last year. However, the slight uptake in bond yields was on account of global risk appetite, which were mainly on hopes that the German court ruling will be in support of the European bailout plan that will prevent further damage in the Euro zone.
On the global front, US 10-year Treasuries slipped in Asian trade on Wednesday as investors sought riskier assets ahead of a German court's expected approval of the euro zone's bailout fund and a Federal Reserve meeting at which some investors expect it to muster more stimulus steps. Meanwhile, Brent crude staying above $115 a barrel, edged higher for a fifth straight session on Wednesday.
The yields on 10-year benchmark 8.79% - 2021 edged 2 basis points higher at 8.20% from its previous close of 8.18%.
The Reserve Bank of India has announced the auction of 91 and 182 day Government of India Treasury Bills for notified amount of Rs 7,000 crore and Rs 5,000 crore respectively. The auction will be conducted on September 12, 2012 using 'Multiple Price Auction' method.