Bonds rally on firm demand amid rate cut hopes

The government bonds (G-Sec) prices staged a strong rebound following renewed demand from corporates and market participants on hopes of a rate cut by the Reserve Bank of India (RBI) as early as next month.
Interbank call money rate, however turned weak on the back of reduced demand from borrowing banks amid adequate liquidity in the banking system.
The 10-year benchmark bond 7.72 per cent maturing in 2025 climbed to Rs 99.82 from Rs 99.4725 yesterday, while yield declined to 7.74 per cent.
The 8.40 per cent government security maturing in 2024 rose to Rs 103.1325 compared to Rs 102.77, its yield slipped to 7.90 per cent.

The 7.88 per cent government security maturing in 2030 firmed up to Rs 99.70 as against Rs 99.2650, while yield fell to 7.91 per cent.
The 7.68 per cent government security maturing in 2023, the 8.27 per cent government security maturing in 2020 and the 7.35 per cent government security maturing in 2020 also were quoted fairly higher at Rs 98.7125, Rs 101.5375 and Rs 96.38, respectively.
The overnight call money rates ended soft at 7.00 per cent from Wednesday's closing level of 7.24 per cent. It swung widely between a high of 7.28 per cent and low of 6.75 per cent.

Meanwhile, the Reserve Bank of India, under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 59.37 billion in 18-bids at the one-day overnight repo auction at a fixed rate of 7.25 per cent this morning while, its sold securities worth Rs 27.50 billion from 20-bids at the reverse repo auction at a fixed rate of 6.25 per cent late yesterday.