Mumbai: The bond yields came off highs on Tuesday, ignoring off borrowing concerns seen earlier in the day, on expectations of lower inflation and weaker industrial data.
At 1:15pm, the yield on the 8.24% bond maturing in 2018 was unchanged at Monday’s close of 6.22%, and off from the day’s high of 6.29%.
Dealers said they expect inflation to ease further as a result of the fuel price cut and industrial output for December may be weaker than the 2.4% rise in November, creating a conducive environment for further rate cuts.
Other recent data also indicated further economic slowdown. Exports fell an annual 1.1% in December to $12.7 billion, a third straight fall, data showed on Monday, while a survey showed a third successive month of contraction in the manufacturing sector in January.
The government said after trading hours on Monday it would auction Rs50 billion of 7.46% 2017 bonds and Rs20 billion of 6.30% 2023 bonds on 6 February.
Dealers also said the auction announcement was along expected lines and it has not deviated from its borrowing schedule so far and hence the market is now focusing on upcoming economic data.