Bond yields softened on Tuesday after Reserve Bank of India, in its second quarter monetary policy review, much in line with expectations, hiked repo rates by 25 basis points and rolled back the MSF rate by the same quantum. Although India’s apex bank left the Cash Reserve Ratio (CRR) unchanged, it increased the liquidity provided through term repos of 7-day and 14-day tenor from 0.25% of bank deposits to 0.5% with immediate effect.
On the global front, Prices for U.S. Treasuries dipped on Monday as investors made room for this week's $96 billion in longer-dated government debt supply, with yields hovering near three-month lows. Meanwhile, brent crude edged lower toward $109 a barrel on Tuesday ahead of a Federal Reserve policy meeting but kept most of the previous day's gains after reports of a sharp drop in Libyan oil exports, which rekindled worries over supply
Back home, the yields on 10-year 7.16% - 2023 bonds, were trading 7 basis points lower at 8.59% from its previous close of 8.66% on Monday.
The benchmark five-year interest rate swaps were trading 3 basis points higher at 8.27% from its previous close of 8.24% on Friday.
The Government of India have announced the sale (re-issue) of '1.44% Inflation Indexed Government Stock-2023' for a notified amount of Rs 1,000 crore through price based auction. The auction will be conducted using uniform price method. The auction will be conducted by the Reserve Bank of India, Fort, Mumbai on October 30, 2013 (Wednesday).
The Reserve Bank of India has announced the auction of 91 and 364 days Government of India Treasury Bills for notified amount of Rs 6,000 crore each. The auction will be conducted on October 30, 2013 using 'Multiple Price Auction' method.
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