Bonds yields may ease

The yield on the government bonds may ease on Monday as investors await fresh cues on interest rate trend.

Dealers said yields may buck the trend (of hardening) which was driven by the rising inflation and apprehension over Reserve Bank of India making a start for tight monetary policy. Investors could chose to stay light until fresh cues on interest rates emerge.

The selection of papers for auction on Friday, movement in US Treasury notes and global crude oil futures may also influence sentiment in domestic bonds. On Friday, the G-Sec market improved on value buying and amidst the auction cut-offs being in line with expectations. The benchmark 10-year paper (6.90 per cent paper 2019) closed at Rs 94.30 implying a yield of 7.76 per cent.

 

Call rates to remain steady
The interest rates in the overnight inter-bank market are expected to remain steady on ample liquidity in the system. Banks have made provision for meeting reserve requirements. There are sufficient resources in the system to manage any increase in demand for funds, dealers said. On Friday, call rates moved in the range of 3.20 per cent to 3.40 per cent, which is around reverse repo rate as the liquidity in the money markets was comfortable.

Rupee may turn weak
After witnessing sharp rise in value against the US dollar last week, Indian rupee may turn weak on increase in demand from importers. The flow of overseas capital in stock market and from dollar’s movement against major currencies would also influence the rupee.