Mumbai: Indian federal bond yields ended off day’s lows as traders booked profits after a sharp fall in yields due to risk aversion as euro zone debt worries impacted market sentiment, dealers said.
Dealers said details of next week’s $2.6 billion bond auction would be watched for cues and this would set the tone for trading in the week starting 10 May.
The yield on the most traded 7.02% bond maturing in 2016 ended at 7.48%, down 2 basis points on the day after falling as low as 7.37% during trade its lowest in more than five weeks.
The new 10-year bond, the 7.80% maturing in 2020, closed at 7.64%, one basis point down, off the day’s low of 7.50%.
The benchmark 10-year bond yield ended up two basis points at 7.99% after hitting the day’s low of 7.85%. Volumes were a heavy Rs19065 crore ($4.2 billion) on the central bank’s trading platform
“Some profit booking had to be done after the sharp fall in yields and traders also don’t want to carry positions over the weekend as they want to watch global developments,” said Parijat Agrawal, head of fixed income at SBI Funds Management in Mumbai.
The government is due to sell Rs12,000 crore of bonds next week after selling Rs64,000 crore of bonds of the Rs28,700 crore it plans to raise in the April-September period.
Treasury Secretary Timothy Geithner is expected to talk with his fellow finance ministers in a conference call to get an update about the agreement between the International Monetary Fund and the European Union on aid for Greece, a Treasury spokesman said on Thursday.
The results of the Rs15,000 crore federal bond auction were in line with market expectations and did not impact prices.
Dealers said they were keenly awaiting March industrial data and April inflation numbers due next week.
They said even if the data was higher than expectations, the upside to yields would be capped as a weak global macroeconomic environment was likely to deter the central bank against hiking rates.
In interest-rate futures on the National Stock Exchange, the June contract implied a yield of 8.1718% while the September contract was not traded.
The benchmark five-year interest rate swap was at 6.64%/66%, from its previous close of 6.70%/73%.