Bonds react downward while call rates drops further
Prices of government bond on Tuesday reacted downwards on fresh selling pressure while their yields recovered. However, call rates dipped further due to comfortable liquidity in the banking system. The intervention by the central bank to curb the spiralling rupee and redemptions of bonds helped to boost the liquidity situation in the market.
The 7.59 per cent government security maturing in 2016 declined to Rs 96.50 from Rs 96.61 on Monday while its yield edged up to 8.15 per cent from 8.13 per cent previously.
The 7.38 per cent government security maturing in 2015 also moved down to Rs 95.50 from Rs 95.75 previously while its yield rose to 8.14 per cent from 8.09 per cent.
The 8.07 per cent government security maturing in 2017 also eased to Rs 99.82 from Rs 100.05 while its yield moved up to 8.09 per cent from 8.06 per cent.
In the overnight call market, call rates fluctuated in a range of 6.50 per cent and 4.00 per cent before concluding lower at 4.00 per cent from previous close of 6.00 per cent.
The Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF) received 20 bids of Rs 18,275 crore at the one day repo auction at the rate of 7.75 per cent in the morning but the central bank accepted all bids of only Rs 2,000 crore.
The RBI also accepted 20 bids of Rs 14,995 crore at the one day reverse repo auction at the rate of 6.00 per cent of the total 20 bids received of Rs 994 crore in the evening under second LAF.