10-year bonds fell for a second day after the central bank said Asia?s third-biggest economy may expand at a pace faster than previously forecast.
Some investors probably sold a part of their debt holdings on concern a pickup in growth and inflation will prompt the central bank to stop cutting interest rates and make the securities less attractive. The yield on the 6.90% note due July 2019 rose 4 bps to 6.95% at the close.
?The situation is not conducive for bonds,? said Baljinder Singh, a trader at Andhra Bank. ?Investors will take a fresh guard after it is known what the central bank thinks about the way forward. They probably chose to lighten their positions.?
Meanwhile, rupee rose for a third successive day, overcoming a lack of direction from the share market and month-end dollar demand from importers, but pulling up short of the 48 per dollar level.
It closed at 48.16/17 per dollar, off a high of 48.0850 but still 0.1% stronger than its Friday?s close of 48.22/23.
?The volumes were not too large today, the rupee was moving in line with the domestic stocks and other cross currencies like the euro and pound,? said K. Radhakrishnan, chief currency dealer with UCO Bank.