BackIndian bonds edge up on value-buying; foreign investor sell-off continues
The yield on the existing benchmark 10-year bond, the most traded paper, ended 2 basis points lower at 8.85%
Premium
Mumbai: Indian government bonds edged up on Thursday, as value-buying attracted some investors after two sessions of sharp losses, although sentiment remained weak as foreign investors continued their selling spree. Emerging markets across the globe have seen a sharp sell-off from global investors amid increasing tensions between Russia and the West, with Russia’s ban on certain imports from the US and Europe worsening sentiment.
Foreign investors net sold debt worth $271.13 million on Wednesday, as per official data. They have net sold debt worth almost $700 million in August so far. Expectations that Reserve Bank of India (RBI) governor Raghuram Rajan would abstain from cutting interest rates at least through the rest of 2014 also continued to weigh on sentiment after the central bank’s policy review on Tuesday. “RBI governor’s unexpected tone has now made the possibility of a rate cut remote," said Surendran A.V., head of treasury at Dhanlaxmi Bank Ltd in Mumbai. “There may be a further 3-5 basis points rise in 10-year yields before we see any pulling back," he added.
The yield on the existing benchmark 10-year bond, the most traded paper, ended 2 basis points lower at 8.85%. The yield on the new 10-year paper, the second most-traded security, ended 1 basis point lower at 8.63%. Bargain-hunting spurred some buying on Thursday, with some analysts also citing a fall in Brent crude as another relief. Still, sentiment is weak, with the sell-off in bonds since Tuesday’s policy review announcements appeared particularly pronounced in 2-6 year government debt.
In the overnight indexed swaps market, the benchmark five-year swap rate closed up 3 basis points at 8.14%, while the one-year rate ended unchanged at 8.50%. Reuters
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
