Bonds gained for a fourth day, the best winning streak in two months, on speculation the government?s plan to sell shares in state-run companies will help narrow the fiscal deficit.
The yield on the benchmark 10-year note declined to the lowest level in more than two weeks after the finance ministry said last week the nation has 60 companies in which it can sell stakes to raise funds. India?s budget deficit may reach 6.8% of gross domestic product, the most since 1994, in the year to March 31, according to the ministry.
?There are reasons to believe that the supply of debt in the near future will be less because of the approach of policy makers towards bringing back overall stability,? said Sanjay Arya, treasurer at Bank of Maharashtra. ?Yields will decline at a faster pace now.?
The yield on the 6.9% note due July 2019 dropped 2 bps to 7.26%, the lowest level since November 3, at the close.
The finance ministry is in talks with other ministries for selling stakes in SAIL and CIL, Sunil Mitra, secretary for asset sales at the ministry, said on November 13. The government expects to complete sales in NTPC Ltd, Rural Electrification Corp and Satluj Jal Vidyut Nigam Ltd in the year ending March, he said.
The amount absorbed through LAF reverse repo operation stood at Rs 85,410 crore, lower compared to Rs 92,740 crore. The overnight call rate was seen in the range of 3.20-3.35%.