Bonds lose ground; Re gains 12 paise June 20, 2009
Posted by dhirendra1972 in Confident of Buying, Current Levels, Definite Direction, Higher Amount, Largest Treasury, Lower Yields.Tags: Bonds, Brokerage, Budget Announcement, Common-Traded Bond, Economy, Economy Recovery, Global Currencies, Government Bonds, Liquidity Window, Market Activity, Market Sentiments, Mature Bonds, Net Deposits Time Liabilities, Profit, Range-Bound, Traders
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Good morning friends. It came to my knowledge that bonds which lose ground but regains in 12 paise. Government bonds lost ground on Friday, after traders booked profits despite RBI announcing lower yields at a Rs 15,000-crore auction. Meanwhile, the central bank announced another auction of Rs 15,000 crore for the coming Friday, the sixth time that such a higher amount has been announced.
Dealers say the market activity would continue to remain range-bound till the Budget, only after which yields would take a definite direction. They added some bonds had rallied after Thursday’s buyback. Hence, traders booked some profits on Friday.
The most commonly-traded bond — the 5 year bond — ended lower, after the results came in. Its yield ended at 6.64%, 5 basis points higher than its previous close. When yields rise, prices fall. The benchmark 10-year 6.05% paper only had trades worth Rs 170 crore. On Friday, RBI said it had set a cut-off yield of 7.35% at the auction of the new 15-year bond, below the market expectation of 7.47%. This meant that the central bank got a better price for government bonds. It also sold three other bonds maturing in 2015, 2020 and 2034 at yields largely in line with market expectations. RBI totally raised Rs 15,000 crore through these auctions.
“Market sentiment is expected to ease from current levels, with the likelihood of confident buying as budget announcement wipes out ambiguities,” said a research report by Edelweiss Securities said. “With banks’ SLR investments near the historical low of around 26% of the Net Deposits Time Liabilities (adjusted for RBI’s liquidity window), the largest treasury buyers are expected to shore up purchases to seek the 7% plus yields on dated government bonds,” Rahul Chokshi & Varda Pandey, analysts with the brokerage said in a note to clients.
The rupee rose marginally from its one-month low on Thursday, as upswings in stocks helped counter gains in the dollar against major global currencies. The rupee closed at 48.10 against the dollar, higher than its previous close of 48.22, a gain of 12 paisa.
The dollar traded higher against the euro on Friday and edged higher against the yen, after US yields rose following relatively positive data on US jobless claims that encouraged hopes for the economy recovery. – The Economic Times
