| The market expects the inflation rate to be announced on Friday to be around 6.40 per cent and this concern has led to heavy selling by mutual funds. |
| Banks on the other hand, are holding on the portfolio for fear of booking a loss while marking to market their portfolio. |
| Panic selling by mutual funds resulted in the yield on 10-year benchmark 7.37 per cent 2014 paper closing at 5.96 per cent as against 5.88 per cent on Wednesday. |
| Prices in the long term of the maturity spectrum crashed by over Re 1 while in the medium term, prices fell by almost 50-60 paise. |
| The spot rupee on the other hand, opened weak at 46.09/11 to a dollar as against Wednesday's close of 46.02, due to a strong demand for dollars. It fell to 46.19 before closing flat at the opening levels. |
| Dealers attributed the heavy demand to the foreign banks who were seen buying dollars for customers lured by the premium levels in the non-deliverable forwards market. |
| The hardening in bond yields started before the US Federal Reserve hiked its base rates by 25 basis points, but spiralled after the Budget proposed a turnover tax on the purchase of bonds on the stock exchanges. |
| The week, there have hardly been any deals in long term paper except for some demand by the provident funds. "There were days, where there were no quotes for the most liquid paper in the market 8.07 per cent 2017," said a dealer. |
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