Mumbai: India’s seven-year bonds rose, halting a three-day slide, on speculation nine-month-high yields will attract investors.
Yields on the most-traded debt due August 2016 added 34 basis points in the past three days, the most in such a period since March, according to Bloomberg data. One basis point is one-hundredth of 1 percentage point.
Some investors are betting the central bank will purchase more securities from the market to provide support, according to Baljinder Singh, a trader at state-owned Andhra Bank in Mumbai.
The present levels have priced in most uncertainties and that is why we are seeing some buying, Singh said. “I am expecting yields to stabilize around these levels.”
The yield on the 7.02% note due in 2016 slipped 1 basis point to 7.38% as of 4.08pm, according to the central bank’s trading system. The price rose 0.07 to 98.02.
In the derivatives market, 10-year bond futures maturing by 31 December traded at 8.20%, while the contract due 31 March was at 8.31%.
The cost of five-year interest rate swaps, or derivative contracts, used to guard against fluctuations in borrowing costs, was little changed. The rate, a fixed payment made to receive floating rates, was at 6.41%.