Bond yields dropped on Wednesday after the central bank decided to buy back up to Rs 10,000 worth debt on Thursday in order to ease the tight liquidity conditions. Bonds also fell after India's economy grew much in line with expectations at 6.9 percent in the September quarter from a year earlier.
After the market closed on Tuesday, RBI decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 10,000 crore on December 1, 2011. The bonds were 7.99 percent maturing in 2017, 7.80 percent 2021, 8.08 percent 2022 and 8.26 percent 2027.
On the global front, US Treasury debt prices slipped on Tuesday as signs of a pickup in US consumption encouraged investors to buy stocks, though worries about the outcome of the euro zone debt crisis kept markets cautious. Meanwhile, Oil prices fell to near $99 a barrel Wednesday in Asia after a report showed US crude inventories rose more than expected.
The yields on 10-year benchmark 8.79% - 2021 bonds 2021 bonds were trading at 8.76%, down from previous close of 8.69% on Tuesday.
The benchmark five-year interest rate swaps were trading at 7.27% from its previous close of 7.31% on Tuesday.
The Reserve Bank of India has announced the auction of 91-day and 364-day Government of India Treasury Bills for notified amount of Rs 4,000 crore each. The auction will be conducted on November 30, 2011 using 'Multiple Price Auction' method.
Meanwhile, the Government of India have announced the sale of three dated securities for Rs 13,000 crore on December 2, 2011, which includes, (i) “7.83% Government Stock 2018” for a notified amount of Rs 4,000 crore (nominal) through price based auction, (ii) “8.79% Government Stock 2021” for a notified amount of Rs 6,000 crore (nominal) through price based auction and (iii) “New 19 year Government Stock 2030” for a notified amount of Rs 3,000 crore (nominal) through yield based auction.
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