Bond yields plunged sharply on Wednesday after the central bank deferred a weekly debt sale. India’s central bank late on Monday deferred an auction worth Rs 15,000 crore, scheduled to be held on Friday after reviewing the government's cash position and funding requirement. Further, bonds also rallied after easing retail inflation bolstered hopes that the central bank would keep interest rates on hold at its policy review on January 28, 2014. However, sharp uptick of bond was capped on account of prevailing caution ahead of December WPI data, which is likely to likely to edge lower to 7.00 percent in December from a 14-month high of 7.52 percent in November
On the global front, U.S. Treasury yields rose on Tuesday after two Federal Reserve officials supported further cuts to the U.S. central bank's bond purchase program, despite Friday's weaker-than-expected employment report. Meanwhile, brent crude edged down towards $106 a barrel on Wednesday as the prospect of a rise in Iranian oil exports weighed, while investors looked ahead to weekly oil inventories data from the United States to assess supply.
Back home, the yields on new 10 year Government Stock 2023 were trading 4 basis points lower at 8.67% from its previous close of 8.71% on Monday.
The benchmark five-year interest rate swaps were trading 4 basis points lower at 8.21% from its previous close of 8.25% on Monday.
The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 4,000 crore and Rs 3000 crore respectively. The auction will be conducted on January 15, 2014 using 'Multiple Price Auction' method.
Eleven State Government Securities have offered to sell securities by way of auction for an aggregate amount of Rs 11,500 crore on January 15, 2014.
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