Rupee ends a tad stronger, bonds recover

Mumbai, March 24 | Updated: Mar 25 2005, 05:30am hrs
On Thursday, the bond market witnessed a considerable recovery with yields softening by six basis points, on account of cooling of oil prices, coupled with softening of 10-year yield US treasury notes.

The yield of 7.38% 2015 stock ended at 6.67% as against the previous close of 6.73%, while its price rose by a whopping 42 paise to end the day at Rs 105.25.

Prices of crude oil fell to $54 per barrel, which aided the yields to come off from the opening highs. Further, the 10-year yield of US treasury notes fell to 5.58% from Wednesdays close of 5.68%, which bolstered the sentiments of the ailing bonds, said dealers.

A dealer with a public sector bank said, The international factors like oil prices and US yields helped bonds to extend gains even as there were no positive domestic triggers.

Meanwhile, the call rates eased to 4.00-4.50% ahead of a long weekend. In fact, mutual funds were even lending at 3% on Thursday, said dealers. The Reserve Bank of India (RBI) mopped up Rs 10,900 crore by accepting 19 bids at one day reverse repo auction at 4.75%, under liquidity adjustment facility.

The market is closed on Friday and Saturday on account of Good Friday and Holi respectively.

The inflation reported a marginal decline in inflation to 5.23% for the week ended March 12 since essential commodities like vegetables and fruits and several manufactured products became costlier.

The widely-tracked point-to-point wholesale price index (WPI) inflation shed 0.07% from the previous weeks level of 5.30%, despite costlier food and non-food articles and other minerals.

In the forex market, the rupee came off its one-month low. Most banks unwound their long dollar positions on account of the long weekend.

The rupee opened weaker, on the back of the dollars run-up to six-week highs against the yen and five-week highs against the euro.

However, robust inflows from foreign investment helped the local currency to report a modest recovery.

The Indian currency closed at 43.7500/7550 per dollar, a tad stronger than Wednesdays one-month closing low at 43.79/80. Basically, this is because of the long weekend, said a dealer at a state-run bank. The yields on forward premiums ended almost flat on Thursday.