Bond yields were trading lower after the October-December growth data came in sharply below market expectations, raising hopes of a rate-cut by the RBI in March policy review. India's economy grew at a worse-than-expected 4.5% in the quarter ending December. Further, traders also await the open market operation purchase of bonds by the central bank later in the day for direction. The RBI is scheduled to buy up to Rs 10,000 crore worth of bonds from the market.
On the global front, US Treasuries were firm in Asia on Friday, supported by safe-haven bids as the US economy braces for federal spending cuts from this month and also on uncertainty over Italy's political crisis. Meanwhile, Brent crude slipped toward $111 a barrel on Friday, weighed down by concerns that oil demand will be hurt if China's economy continues to sputter, the euro zone remains weak and automatic spending cuts are enacted in the United States.
Back home, the yields on 10-year 8.79% - 2021 bonds were trading down by 2 basis points at 7.85% from its previous close of 7.87%.
The benchmark five-year interest rate swaps were trading lower by 2 basis points at 7.20% from its previous close.
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 March 1, 2013 through multi-security auction using the multiple price method.
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