Bottom fishing ahead, with eyes on poll data
OUTLOOK: Government securities
| Last Friday, the bonds market lost three basis points and yield on the 7.37 per cent 2014 closed at 5.11 per cent, down from 5.14 per cent. |
| This week, the ten year benchmark, will be in the range of 5.08-5.12 per cent, according to dealers. The initial part of the week might witness some selling pressure as players who had built up heavy positions last week will book profit before the exit poll numbers are out. |
| Last week, bond prices fell by a rupee owing to the first exit poll results, but with inflation at 4.4 per cent, participants went on a buying spree. |
| Meanwhile, Rs 9,000 crore auctions of government securities are slated for May 6. While the 6.10 per cent 2028 will be auctioned to mop up Rs 3,000 crore, a floating rate bond maturing in 2016 will garner Rs 6,000 crore. |
| Participants said this will not impact the funds position as around Rs 70,000 crore is outstanding with the Reserve Bank of India in seven-day repos. |
| The international interest rate scenario looks foggy amid indications that the US could raise its rates late in the year. |
| Dealers said the country's data show that the economy is on the upswing and rates would move up, but presidential elections could prevent the US Federal Reserve chairman Alan Greenspan from making a move. The global situation is also nudging Indian bond dealers to revisit the local interest rate structure. |
| The medium to long term view is that rates are going to firm up because, except for liquidity, there is no trigger for the yields to move down at present. |
| If the second lot of exit polls causes is unclear about the popular mandate, it could only aggravate the uncertainty and reduce further the already tapering foreign fund flows. |