Bond prices soared by over Re 1 in intra-day trades and volumes perked up.Prices of select bonds were up by 75-90 paise with some jumping up by nearly Re 1, and all this despite call rates holding nearer to 10 per cent levels all through the day.

PNB Gilts managing director Arun Kaul said, "News of a Fed rate cut has altered the sentiment. It is clearly bullish... trading volumes were up.

Yields fell resulting in an appreciation in gilt portfolios. All this has happened despite call rates holding steady at 10 per cent thereabouts."

The 11.30 per cent 2010 paper was quoted at Rs 103.65, up from its last close at Rs 103.05. Similarly, the 11.40 per cent 2008 paper was quoted at Rs 104.77 (Rs 104.19) and the 11.03 per cent 2010 paper at Rs 101.10 (Rs 100.53). Dealers said prices of these securities rose by nearly Re 1 in intra-day trades before profit-booking. On the National Stock Exchange's wholesale debt segment, volumes stood at Rs 3,333 crore (Rs 2,973.21 crore).

Trades worth Rs 545.10 crore were seen in the 11.30 per cent 2010 paper; Rs 465 crore in the 11.40 per cent 2008 paper; and Rs 410 crore in the 11.03 per cent 2012 paper.

Inter-bank dealers also sniff a bank rate cut, which now stands at 8 per cent. The only counter-argument against this is that headline inflation is now at 8 per cent. Many see it tapering in this quarter, and a cut, if any, may come through towards the end of the fiscal. More so, now that the Centre has completed 86.16 per cent of its gross borrowing amount of Rs 1,17,000 crore, few see a bank rate coming through. As Credence director Shefali Sachdev points out: "The headline inflation at 8 per cent is largely due to the increase in administered prices, less due to any increase in money supply."

Dealers also noted that Thursday's rally in bond prices came despite no respite in call rates. The central bank accepted 12 bids to inject Rs 2,205 crore through its reverse-repos auction at the cut-off rate of 10 per cent while it did not receive any bids at its repos-auction.