Market expects cut-off price of 11.90 bonds maturing in 2007 to Rs 100.85

A substantial portion of the market expected the cut-off price of the 11.90 government security maturing in 2007 to be in the range of Rs 100.85, according to a poll conducted by Credence India.

The players have, however, given a wide range of Rs 100.65 and Rs 100.90, clearly indicating a heterogeneous picture.

According to the Credence poll, opinion in the banking sector is divided on the level of the cut-off price.

A majority 30 per cent of the banks believe that cut-off price should be in the range of Rs 100.85 and Rs 100.90.

Many banks feel that the Reserve Bank of India (RBI) might peg the cut-off price at higher levels and resort to devolvement on primary dealers.

Primary dealers, however, have taken an aggressive view on the pricing with 63 per cent of them expecting cut-off price to be between Rs 100.70 to Rs 100.75.

Most of them are of the opinion that cut-off yield would be close to 11.75 per cent, say Credence.

In the broking community opinions are equally divided, according to Credence.

Around 22 per cent of brokers believe that cut-off price will be in the range of Rs 100.75 and Rs 100.80.

A further 22 per cent put cut-off price between Rs 100.80 to Rs 100.85 and an equal percentage are expecting higher cut-offs.