Bonds continue free fall ahead of budget, weak rupee

Government bonds (G-Secs) prices dropped further as market sentiment remained extreme bearish on persistent selling pressure from banks and corporates.
Sliding rupee value against the US dollar as well as near-term concerns that government will widen its deficit targets to boost economic growth too unnerved investors ahead of the Union Budget.
Meanwhile, the Union Railway Budget 2016-17 focused with an increased outlay of about Rs 1.21 lakh crore, a 21 per cent hike in capital spending.
The domestic currency slipped to end at a fresh 30-month low of 68.72 to the dollar - its weakest level this year so far.

Interbank call money rates retreated once again after a brief recovery due to subdued demand from borrowing banks in the face of adequate liquidity in the banking system.
The benchmark 7.59 per cent government security maturing in 2026 declined to Rs 98.15 from Rs 98.34 yesterday, while its yield firmed up to 7.86 per cent from 7.83 per cent.

The 8.27 per cent government security maturing in 2020 slumped to 100.95 per cent compared to 101.3050, while its yield moved to 8.00 per cent from 7.90 per cent.
The 7.88 per cent government security maturing in 2030 drifted to Rs 96.86 as against Rs 97.35 previously, while yield jumped to 8.26 per cent from 8.20 per cent.

The 7.72 per cent government security maturing in 2025, the 7.59 per cent government security maturing in 2029 and the 7.68 per cent government security maturing in 2023 were also quoted substantially lower at Rs 97.68, Rs 94.96 and Rs 97.30, respectively.
The overnight call money rates finished subdued at 6.00 per cent from Wednesday's close of 6.95 per cent after moving in a narrow range of 6.95 per cent and 7.00 per cent during the session.
Meanwhile, the Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 159.02 billion in 30-bids at one-day repo auction at a fixed rate of 6.75 per cent this evening, while it sold securities worth Rs 27.13 billion from 21-bids at the one-day reverse repo auction at a fixed rate of 5.75 per cent late yesterday.