The government securities market received a boost from the results of the scheduled auction of government bonds, which saw a positive demand and attracted a higher-than-expected price, with prices of key gilts shooting-up by 40-45 paise, coupled with a slide in global crude oil prices, which was at nearly $51 a barrel, said a primary dealer .
There was increased buying interest from nationalised banks. While the benchmark 10-year paper was not favoured on Tuesday, the 6.85% sock maturing in 2012 traded well, quoting at Rs 99.92 at closing against the opening price of 99.45, giving a yield of 6.86%, against the mornings yield of 6.88%, the dealer said.
Yield on the benchmark 10-year 7.38% 2015 stock ended at 7.07% against the previous close of 7.08%. Meanwhile, volumes remained rangebound at about Rs 2,150 crore, as reported on NDS, of which, treasury bills accounted for Rs 1,250 crore worth. RBI set a cut-off price of Rs 104.50 for the re-issued 8.07% 2017 bond, the cut-off yield being 7.485%, while the cut-off price of the 7.50% 2034 bond was Rs 95, giving a yield of 7.941%.
However, sentiments are cautious with the stock market ending 22 points negative, amid fears that this indicated a slowdown of foreign institutional inflows. Foreign funds have invested nearly $4 billion in stocks so far this year, almost half the record $8.5 billion in 2004.
Meanwhile, the forward markets remained dull despite a small amount of paying interest corresponding to purchases in spot. The six-month annualised premium ended at 1.83% as against the previous close of 1.86%, while the 12-month annualised premium ended the day at 1.55% against the previous close of 1.57%.
The call money market remained rangebound, as call rates remained easy on the back of ample liquidity in the banking system. Call rates ended at 4.6-4.7%. RBI received Rs 31,725 crore at the one-day fixed rate reverse repo auction on Tuesday at 4.75% under LAF.