Crude price holds key

OUTLOOK: Government securities

Rising crude oil prices continues to remain the biggest cause for concern. The flare-up, however, is not likely to immediately impact inflation as the coming few weeks would have the benefit of last year's high-base effect.

The market is also looking forward to the government borrowing program to be announced in the first week of June for raising about Rs 10,000 crore.

If crude oil declines and the cut-offs at the auctions are in line with market expectations, there will be buying demand from players other than traders.

If oil continues to rise, government securities prices may fall afresh.

In this backdrop, the 10-year benchmark yield is expected to rule in a range of 6.95-7.10 per cent. The participants seem to be taking comfort from the continuing good liquidity levels.

Recap: Prices of government securities failed to rally despite lower inflation rate for the week ended May 15 because of rising crude oil prices and apprehensions over the government's borrowing programme.