Bonds extend rally as inflation eases, call rate slips

The government bonds continued to rally on consistent buying support from banks and corporates amid optimisim that the Reserve Bank of India (RBI) will keep interest rates on hold following easing inflationary pressure.
While, overnight call money rates finished lower due to lack of demand from borrowing bank coupled with ample liquidity in banking system.
The 8.83 per cent government security maturing in 2023 shot up to Rs 101.2325 from Rs 100.76, while its yield declined to 8.64 per cent from 8.71 per cent previously.
The 8.28 per cent government security maturing in 2027 strengthened to Rs 94.72 from Rs 94.0750, while yield dropped to 8.95 per cent from 9.04 per cent.

The 8.12 per cent government security maturing in 2020 also hardened to Rs 96.39 from 95.99, while its yield slipped to 8.83 per cent from 8.91 per cent.
The 7.28 per cent government security maturing in 2019, the 8.24 per cent government security maturing in 2027 and the 7.16 per cent government security maturing in 2023 were also quoted firm at Rs 93.97, Rs 94.43 and Rs 88.84, respectively.
The overnight call money rate ended lower at 8.55 per cent from 8.75 per cent on Monday. It fluctuated between a high of 8.80 per cent and a low of 7.70 per cent.

The Reserve Bank of India (RBI) under the Liquidity Adjustment Facility (LAF) purchased securities worth Rs 399.63 billion in 60-bids at the one-day repo auction at a fixed rate of 7.75 per cent, while sold securities worth Rs 4.94 billion from 6-bids at the one-day reverse repo auction at a fixed rate of 6.75 per cent in the evening auction.