Government Securities (G-Secs) rallied on Friday on reports that India is tipped to join JP Morgan’s widely tracked emerging-market bond index.

The government raising less than the notified amount in the weekly auction also boosted market sentiment.

The price of the benchmark 10-year G-Sec (coupon rate:6.54 per cent) jumped almost 50 paise to close at ₹95.43 (previous close: ₹94.935). Yield of this paper declined sharply by about 8 basis points to close at 7.2173 per cent (7.2929 per cent). This paper is the most traded in the G-Sec market.

Bond prices and yields are inversely co-related and move in opposite directions.

According to a Financial Times report, Wall Street bank JPMorgan is sounding out big investors on adding India to its widely tracked emerging-market bond index, setting the stage for tens of billions of dollars of inflows as the country’s domestic market opens up to foreign capital.

The price of the second most traded G-Sec, which matures in 2036 and carries a coupon rate of 7.54 per cent, shot up 73 paise to close at ₹101.32 (previous close: ₹100.59). Yield of this paper declined sharply by about 9 basis points to close at 7.3834 per cent (7.4686 per cent). This paper is the most traded in the G-Sec market.

At the weekly auction of G-Secs, the government raised ₹28,000 crore against the notified amount of ₹32,000 crore. The Reserve Bank of India rejected the bids it received for the auction of the floating rate bond without devolving the paper on primary dealers. This perked up market sentiments.

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