Bonds hit 2-week high; Fed taper has little impact

Government securities (G-secs) rose to a two-week high on Thursday, even after the US Federal Reserve announced the start of a wind -down in its monetary stimulus, as fears of foreign selling in debt markets have eased after recent buying.

Bonds extended gains from Wednesday's rally after the Reserve Bank of India (RBI) unexpectedly kept interest rates unchanged. However, traders cited an under-current of angst after RBI continued to talk tough on inflation, raising the prospect that continued high retail and wholesale prices could lead the central bank to resume monetary tightening.

The 8.83 per cent G-sec maturing in 2023 shot up to Rs 100.55 from Wednesday's Rs 100.28, while its yield fell to 8.74 per cent from 8.78 per cent. The 7.16 per cent G-sec maturing in 2023 climbed to Rs 88.36 from Rs 87.76, while its yield declined at 9.02 per cent from 9.12 per cent.

Call rates end lower
Call money rates ended lower at the overnight market due to lack of demand from borrowing banks. The rates ended at 8.75 per cent from Wednesday's nine per cent. It moved in a range of 8.95 and 7.76 per cent.