Hectic Trading In Govt Securities

NSE REPORT

Bullish sentiments were witnessed on the central government securities counter on the NSE yesterday. Brokers said gilts saw hectic trading as the over-night borrowing costs for banks slid below two per cent levels.

Says a nationalised bank dealer, The current week is in the second lap of the fortnight and majority of banks, having covered their cash reserve ratio requirements, were seen funding assets through calls.

The medium- to long maturity government stock was traded at yields to maturity (YTM) in the region of 10.59 per cent to 13.58 per cent. Even the short-end maturity papers changed hands in the region of 2.83 per cent to 7.97 per cent YTM on the Neat system.

 

Bank treasury heads anticipated the cut-off interest at the Reserve Bank auction repos to be around 5 per cent and funds will go out of the banking system on Thursday, hence deploying funds in gilts made a profitable proposition for traders, said a NSE debt market broker.

That apart, year-end tax planning by corporates saw buying enquiries for tax-free bonds. Yields on the tax-free bonds have dropped sharply due to heavy demand for the paper, said a broker.