The government securities mart seems to have regained vigour, registering a volume of Rs 7,500 crore plus for the second day in a row this week. | |
| On Wednesday, the traded volume touched Rs 7,650 crore against Rs 7,500 crore on Tuesday. According to bank dealers, the spurt has been triggered by active trading in the 7.37 per cent 2014, which was auctioned on Monday. |
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| This was complemented by soothing statements from the Reserve Bank of India governor Y V Reddy on Tuesday, allaying fears about inflation. The governor topped this with a statement today that there might not be interest rate hike given the current macroeconomic situation. |
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| "We reiterate the position there are no unexpected circumstances that have occurred since then (the monetary policy) to warrant any review," Reddy told reporters on the sidelines of a conference in Pune. |
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| This led to an about-turn in the stance taken by bank dealers. They have essentially been selling gilts in the past couple of months. |
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| "Today the market witnessed a major reversal of earlier deals and new positions being taken by the banks wherein they bought government papers in lots," said a foreign bank primary dealer. |
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| The volume in the debt market was reeling at Rs 2,500-3,000 crore since the past few months as the interest rate stance changed from soft to neutral both in India and around the globe. |
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| Meanwhile, the corporate bond market also rallied, tracking the government securities market. |
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| The Food Corporation of India raised funds under its umbrella Rs 5,000 crore borrowing programme for the current fiscal. Dealers don't see any roadblocks to the gilts rally now, excepting some profit sales speed-breakers. |
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| This will especially feature close to the end of the quarter when the banks will have to finalise their books for quarter end financial review. |
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| The trading today took place mainly in 8.07 per cent 2022 and 7.37 per cent 2014 government securities. The ten year government paper 7.38 per cent 2015 closed at 6.81 per cent as against 6.89 per cent on Tuesday. |
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