Bonds rally on rate cut hopes, call rates up

Government bonds (G-Secs) extended gains for the second straight session on the back of good demand from corporates as well as expectations of a cut in the central bank's key policy rate next month.
The interbank call rates also firmed up due to modest demand from borrowing banks amid tight liquidity conditions in the banking system.
The 7.59 per cent government security maturing in 2026 climbed to Rs 101.4075 from Rs 101.32 previously, while its yield softened to 7.38 per cent against 7.39 per cent earlier.
The 7.59 per cent government security maturing in 2029 rose to Rs 100.2675 compared to Rs 100.19, its yield edged down to 7.55 from 7.56 per cent.

The 7.88 per cent government security maturing in 2030 firmed up to Rs 102.51 from Rs 102.40,while its yield inched down to 7.58 per cent from 7.59 per cent.
The 7.68 per cent government security maturing in 2023, the 8.72 per cent government security maturing in 2020 and the 7.72 per cent government security maturing in 2025 were also firmly higher Rs 101.57, Rs 103.72 and Rs 101.3850, respectively.
The overnight call money rates settled marginally higher at 6.50 per cent from Tuesday's closing value of 6.45 per cent after trading in a range of 6.50 and 6.05 per cent during the early trade.

Meanwhile, the Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 16 billion in 3-bids at one-day overnight repo auction at a fixed rate of 6.50 per cent this evening.