Bond yields edged lower as market cheered the unexpected easing of headline inflation to its slowest pace in eight months. Inflation although eased to 7.45 percent in October 2012 (over October, 2011) as compared to 7.81 percent (Provisional) for the previous month, but was still above the Reserve Bank of India's (RBI) comfort level which could complicate the policy choice for the central bank.
On the global front, US Treasuries were supported in Asian trade on Thursday, strengthened by investor concerns that protracted gridlock in Washington could cause a budget crisis that would send the economy reeling. Meanwhile, Brent crude held steady above $109 a barrel on Thursday after Israel attacked the Gaza Strip, raising concern Middle East unrest will disrupt supplies.
The yields on 10-year 8.79% - 2021 were trading 2 basis points lower at 8.19% from its previous close of 8.21%.
The benchmark five-year interest rates were trading down by 5 basis points at 7.70% from its previous close of 7.75%.
The Government of India have announced the sale (re-issue) of three dated securities for Rs 13,000 crore on November 16, 2012, which include (i) ‘8.07 percent Government Stock 2017-JUL’ for a notified amount of Rs 4,000 crore (nominal) through price based auction; (ii) ‘8.15 percent Government Stock 2022’ 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, Mumbai Office, Fort, Mumbai on November 16, 2012 (Friday).
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