Bonds tumble on heavy selling amid rupee slide; call rates up

The government bond (G-Secs) prices dropped sharply for the second staight day following heavy unwinding by market participants as well as foreign funds.
Bond investors are paring huge long positions in last few day in the midst of falling rupee and surging crude oil prices amid concerns that the RBI may defer interest rate cut in near future, a trader said.
The rupee ended at 64.23 - its lowest level in 20-months.
Meanwhile, call money rates continued to rule firm at the overnight call money market due to sustained demand from borrowing banks amidst tight liquidity conditions in the banking system.

The 10-year benchmark bond 8.40 per cent maturing in 2024 tumbled to Rs 102.60 from Rs 103.27 previously, while its yield shot-up to 7.99 per cent against 7.89 per cent.
The 8.60 per cent government security maturing in 2028 slumped to Rs 104.53 from Rs 105.4425, while yield rose to 8.03 per cent compared to 7.92 per cent.

The 8.27 per cent government security maturing in 2020 dropped to Rs 100.92 from Rs 101.46, while its yield firmed up to 8.04 per cent from 7.91 per cent.
The 8.15 per cent government security maturing in 2026, the 8.83 per cent government security maturing in 2023 and the 8.28 per cent government security maturing in 2027 were also quoted substantially lower at Rs 101.01, Rs 104.59 and Rs 101.91, respectively.

The overnight call money rates finished higher at 8.40 per cent from Wednesday's level of 7.50 per cent after fluctuating between a high of 8.50 per cent and a low of 7.05 per cent in early trade.
Meanwhile, the Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 106.05 billion in 20-bids at the 1-day repo auction at a fixed rate of 7.50 per cent this morning, while it sold securities worth Rs 32.90 billion from 28-bids at the 1-day reverse repo auction at a fixed rate of 6.50 per cent late yesterday.