Bond yields see biggest weekly fall since Jan

Written by Reuters | Mumbai | Updated: May 11 2013, 06:22am hrs
Government bonds rose for a fourth straight session on Friday, with yields posting their biggest weekly fall since early January, on hopes upcoming inflation data would support the case for more rate cuts and that the RBI would buy more debt.

The rise this week came amid heavy volumes, with foreign investors continuing to snap up Indian debt as part of a rally in riskier assets globally, as easier monetary policies worldwide increase liquidity.

Hopes that RBI will buy more debt to inject liquidity into the financial system have also supported bonds.

The central bank bought nearly R10,000 crore of bonds this week via open-market operations. Investors are now gearing up for two key economic indicators the consumer price inflation data on Monday and wholesale price inflation data on Tuesday.

The market is expecting low inflation numbers, with WPI below 5.5% and a CPI lower than 9.75%, supporting the rate cut cause ahead, said Sandeep Bagla, executive vice-president at ICICI Securities Primary Dealership.

The benchmark 10-year bond yield fell 1 bps to 7.59%, after touching 7.56%, its lowest since early July 2010.