Players in G-Sec market said that the the mobilisation target is more than what is expected. Bond prices fell after the RBI announcement. In the first quarter, the RBI had planned to mop up Rs 36,500 crore under MSS and the total mobilisation plan for the fiscal is Rs 60,000 crore. Now, with the announcement of another Rs 35,500 crore mobilisation, the total target stands revised at Rs 72,000 crore.
The auction schedule for the period from July 1 to September 30, 2004 has been drawn up in consultation with the Centre.
The RBI has also announced the sale of floating rate bonds (FRB) 2015 for an aggregate amount of Rs 6,000 crore and the auction of 6.13 per cent 2028 for Rs 2,000 crore. The auctions will be held on July 1.
Prices, which were recovering in the afternoon trades from their losses in the morning, started falling as the news hit the market. The 10-year benchmark yield on the 7.37 per cent 2014 paper closed at 5.85 per cent, after opening at 5.81 per cent. Prices of selected papers fell by around 20-25 paise, dealers said.
Volumes on the NSE wholesale debt segment were less at Rs 2,568 crore than Mondays Rs 3,104 crore, amidst bearish market sentiment ahead of the Federal Reserves decision on its key rate and Centres decision on the interest rate of Employees Provident Fund. Meanwhile, the RBI said the rate of interest on FRBs 2017 applicable for the half year (July 2, 2004 to January 1, 2005) shall be 4.82 per cent per annum.