Financial Daily from THE HINDU group of publications
Tuesday, Dec 31, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 31, 2002 |
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Debt Market Money & Banking - Govt Bonds 10-year paper yield falls to 6.11 pc Our Bureau
MUMBAI, Dec. 30 IT was a `frenzied' day in the debt market on Monday with traded volumes touching a high of Rs 7,825 crore against the daily average of Rs 3,000 - Rs 4,000 crore. Yields on Government securities touched new lows yet again, with the benchmark 10-year paper closing at 6.11 per cent in the liquidity-flush debt market. In the absence of credit offtake and lending restrictions in the inter-bank call money market, cash-flooded banks have pumped in huge amounts into the G-secs markets, according to banking analysts. "With almost five days of a uni-directional movement in the yields southwards, we are awaiting a cut in the bank rate and repo rate, in the absence of which these benchmark rates may soon become irrelevant," said the head of a primary dealer, the market makers in the market. Some debt market dealers expressed concern over the `rapidly falling yields'. But they believe this will be a temporary phenomenon, led by the heavy liquidity in the system. G-sec prices rose sharply by 0.50-1.50 paise. The 10-year benchmark paper, the 7.40 per cent 2012 paper, closed at a yield of 6.11 per cent and a price of Rs 109.05, after opening at Rs 108.45 and a yield of 6.19 per cent. On the longer-end of the spectrum, the prices moved up more significantly, as prices move in tandem with the maturity of the instrument. The 8.07 per cent 2017 paper closed Rs 1.20 paise higher at Rs 116.60 and a yield of 6.27 per cent after opening at Rs 115.39 and yield of 6.41 per cent. In the inter-bank call money market, the call rates were observed to be in the 5.60-5.70 per cent levels, with the liquidity remaining quite comfortable. In the liquidity adjustment facility, RBI, the provider and absorber of liquidity in this market, absorbed liquidity to the extent of Rs 1,620 crore through eight bids in the one-day repo auction and Rs 1,070 crore through five bids in the 14-day repo auction at the repo rate of 5.50 per cent.
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