With the Reserve Bank of India?s (RBI) cut-offs at the open market operations (OMO) auctions looking positive, the bond market recouped all its losses and ended on an upside towards the close of the trade, on Thursday. The 6.90% bond, maturing 2019 ended at Rs 98.70 rupees or 7.0835% as compared to Rs 98.66 or 7.0892% on Wednesday in the secondary market..
The cut-off on the 7.38%, maturing 2015 stood at 6.95%, as compared to market expectation of 7.01%. At the same time, 6.05%, maturing 2019 saw a cut-off at 7.09% and 7.95%, 2032 gilt paper saw a cut off of 7.88%, as against market expectation of 8.10%, noted dealers.
?The RBI has bought gilts at a better yield than was expected, which has improved the market sentiment,? said a dealer with a brokerage firm. The central bank decided to buy Rs 2,957.614 crore out of the aggregate amount of Rs 6,000 crore through auctions under OMO on Thursday.
Dealers also noted that volumes traded on the bond market were low as state-owned banks were not present in the market.
Employees of state-owned and private banks are on a two-day strike demanding higher wages and alternative pension option. During the day, the bond market turned bearish as state-owned banks stayed away from the market, dragging the government bond prices lower.
Meanwhile, underwriting commissions were set at 11.08 paise for 6.49% maturing 2015, 19 paise for 6.90% maturing 2019 and 45 paise for 7.40% maturing 2035.
On Friday, the government will offer Rs 4,000 crore of 6.49% bond maturing 2015, Rs 6,000 crore of 6.90% bond, maturing 2019 and Rs 2,000 crore of 7.40% bond maturing in 2035.
Dealers also noted that the bond market turned bearish during the intra-day as a higher PD fee cut-off was set by the RBI at the auctions. According to a report by IDBI Gilts, the yields on the government securities were rangebound tracking low trading activity due to banks? strike. ?The cut-off in OMO purchase auctions was better than market expectations. The turnover on NDS order matching system was noted at Rs 2,915 crore,? it said.
