Bond ends flat as traders brace for poll results

Written by Reuters | Mumbai | Updated: May 16 2014, 10:07am hrs
Government bonds ended off lows and mostly unchanged on Thursday as caution prevailed a day before the election results.

A clear win for the BJP in the general election could mean yields falling as much as 10-15 bps, traders said.

There is some caution ahead of the results and partly because of the supply. We have seen very strong institutional buying in the last six weeks, so there is a technical correction, but demand will pick up again, said Mahendra Jajoo, director & chief investment officer of fixed income at Pramerica MF.

Until the end of next week, the 10-year yield is seen in an 8.65-8.85% band.

The benchmark 10-year bond yield ended flat at 8.78%, after earlier falling to 8.76% and again rising to 8.81% before the close. Initial relief after wholesale prices-led inflation slowed to a two-month low of 5.2% in April proved short-lived amid the caution ahead of election results.