Indian bond prices closed in negative territory in May as concerns on the rising government bond supply weighed on investor sentiments. Also, worries about the recovery in the global economy unnerved investors. However, the softening in headline inflation, which declined to 0.48% on 23 May from 0.7% on 25 April, helped bond prices.
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The yield on the 10-year, 6.05% benchmark paper increased to 6.69% on 29 May, from 6.22% at the end of April.
In May, mutual funds invested Rs10,370 crore in debt securities on inflows in income and liquid funds. Income funds received Rs28,100 crore in net inflows and liquid funds received Rs860 crore. In contrast, gilt funds saw about Rs800 crore in net outflows. Balanced funds, which invest partly in equities and partly in bonds, registered Rs43 crore in net outflows in May.
Graphics by Paras Jain / Mint