Bond yields were trading lower, tracking the stronger rupee after central bank data showed balance of payments swung to a surplus in the December quarter. The yields slipped further due to positive outlook towards elections as pre-election surveys showed that either Modi-led BJP or at least a stable government would come into power. Meanwhile, traders remained reluctant to add positions ahead of the consumer and wholesale inflation data due next week, and also ahead of the Reserve Bank of India's policy review on April 1, 2014.
On the currency front, Indian rupee has strengthened against the dollar enthused by improving sentiment in the domestic economy, as the India’s current account deficit narrowed to $4.2 billion in the October-December quarter compared with $5.2 billion in the previous quarter.
On the global front, U.S. Treasury debt prices were flat on Wednesday as weather-clouded data sidelined investors and tensions in Ukraine calmed. Meanwhile, brent crude held steady just below $108 a barrel on Thursday, as investors looked for direction after easing geopolitical risk over the crisis in Ukraine and U.S. data suggesting weaker oil demand prompted a heavy sell-off over the past two days.
The yields on new 10 year Government Stock 2023 were trading 4 basis points lower at 8.80% from its previous close of 8.84% on Wednesday.
The benchmark five-year interest rate swaps were trading 4 basis points lower at 8.49% from its previous close of 8.53% on Wednesday.
The Reserve Bank of India has announced the auction of 91 and 182-days Government of India Treasury Bills for notified amount of Rs 7,000 crore and Rs 6000 crore respectively. The auction will be conducted on February 26, 2014 using 'Multiple Price Auction' method.