Bond yields ended flat to higher on Friday as auction results were broadly in line with market expectations and traders said ample liquidity offset any near-term concerns about upcoming debt supplies.
The yield on the most traded 7.94%, 2021 bond ended at 7.19%, steady with Thursday?s close.
The 6.90%, 2019 bond was at 6.85%, above Thursday?s close of 6.79%.
The benchmark 10-year bond ended at 6.98%, one basis point above the closing on July 9. It had not traded in the past five sessions.
Volumes were at Rs 10,095 crore on the central bank?s trading platform.
?The market is likely to continue to trade in a band, there will not be a complete bullishness or bearishness,? said Parijat Agrawal, head of fixed income, SBI Funds Management.
Meanwhile, rupee weakened further by six paise to 48.72/73 against the dollar due to importers? demand for the US currency, which was also strong overseas.
In otherwise lacklustre activity at the forex market, the domestic currency moved in a narrow range of 48.60 and 48.75 after resuming higher at 48.60/71 a dollar against its last close of 48.66/68 a dollar.
Forex dealers said despite the firm equity market, the rupee tended to move lower due to a stronger dollar against the euro as well as some dollar demand from importers.
Overnight indexed five-year swap rates ended at 6.16/6.21% from Thursday?s close of 6.14/6.19%.
The spread between 1- and 10-year government bonds widened to 310 basis points, remaining at record high levels.
?In the shorter end the yields are at attractive levels, but it is a very dynamic situation and going forward from September-October the liquidity and inflation need to be watched,? Agrawal said. Under a revised borrowing schedule, the government will sell Rs 1.1 trn of bonds between next week and the end of September.