Bond yields came off day?s lows on Monday as traders pared positions following a drop in yields on lower-than-expected inflation in October, but eyed forthcoming auctions and global cues for further direction.
The yield on the 10-year benchmark bond, 6.9% bond maturing 2019 ended at 7.31%, 1 bp, below Friday?s closing of 7.32%.
The rupee climbed 0.2% to 46.225 per dollar at the close.
“Market will be watching for global events in the next few days… return of risk appetite, crude prices,” said Piyush Wadhwa, senior vice-president at ICICI Securities Primary Dealership.
“According to the calendar, there won’t be an auction next week so this week’s auction should be well-bid and yields could probably come off a bit provided global events are favourable.
“Yields could remain in the range of 7.25-7.35% in the near term,” Wadhwa said.
The central bank will auction Rs 7,000 crore of treasury bills on Wednesday, ahead of an Rs 10,000 crore bond sale on Friday.
Cash rates ended little changed helped by surplus funds in the system and traders said volumes were normal as banks continued to borrow for their fortnightly reserve needs.
The overnight inter-bank money ended at 3.25/30%, hardly moved from Friday’s close of 3.20/30.
Some banks said credit offtake has started picking up but they do not see the possibility of a cash squeeze due to that anytime soon. Banks parked Rs 98,405 crore with the central bank in its reverse repo auction.