Government bond yields fell sharply on Friday after media reports said progress had been made in talks for domestic sovereign debt to be included in the JP Morgan bond index.
The Reserve Bank of India’s (RBI’s) decision to cancel a portion of Friday’s primary auction of bonds worth Rs 32,000 crore also bolstered the appetite for government debt as traders cheered the lack of fresh supply hitting the market.
Yield on the 10-year benchmark paper fell seven basis points to close at 7.22 per cent on Friday. Bond prices and yields move inversely. A fall of one basis point on the 10-year bond yield corresponds to a rise in price of roughly seven paise.