Bond prices rose from their Wednesday level, reacting to the fact the Reserve Bank might pause rates for long.
As prices rise, bond yields fall. The yields on the 10-year bond closed at 7.47 per cent on Thursday, down from its previous close of 7.53 per cent.
The government will auction bonds worth Rs 110 billion on Friday, of which Rs 30 billion will be through an existing floating rate bonds, being re-issued after many years. When a floating rate bond is issued, the duration risk of the bond is curtailed, thereby boosting demand.