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Mumbai: Bond yields fell on Monday on expectations of further interest rate cuts and as investors bought after the government did not announce a date for a Rs 10,000 crore bond auction due between Jan 12 and Jan 16.
The 10-year benchmark bond yield ended at 5.79%, 41 bps below Friday's close of 6.20%. It touched an intraday low of 5.72%.
Volumes were heavy at Rs 20,700 crore on the central bank's trading platform.
"The underlying trend is for yields to fall further as further signs of an economic slowdown will prompt central bank to ease its monetary policy further," said K. Ramkumar, head of fixed income at Sundaram BNP Paribas Mutual Fund.
Market talk the central bank was buying bonds in the secondary market also pulled yields lower.
Industrial output rose 2.4% in November from a year earlier, well above a revised decline of 0.3% in October. Yields had risen after stronger-than-expected data, but later resumed their fall.
Meanwhile, the rupee weakened as demand for dollars from some corporates and banks looking to arbitrage in the offshore markets weighed, with a fall in the local share market adding to the pressure. It closed at 48.84/85 per dollar, 1.2% weaker than its Friday's close of 48.27/29.
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