Gilts end up on bullish inflation view

Government bonds closed up today, snapping a two-day falling streak as banks and primary dealers built positions taking a bullish view on inflation data for week to July 14 due Friday.

"Today everyone has built positions silently without showing desperation of any sort. This position building has been done taking a view that inflation will be at a comfortable level," said Rashmi Narayan, dealer, Andhra Bank.

The headline inflation rate is now expected to be around 4.41 per cent, against earlier expectations of 4.36 per cent. Headline inflation for the week to Jul 14 will be announced around 12 pm on Friday.

Even if inflation rises to 4.41 per cent as forecasted by some in the market, it is not likely to hurt sentiment as the number remains much below 5 per cent, the Mar-end target of the Reserve Bank of India.