Bond prices tumble on fresh selling; RBI holds key rates

The government bond (G-Sec) prices fell sharply across-the-board following renewed selling pressure from corporate and market participants as the Reserve Bank of India (RBI) kept policy rates on hold amid concerns over inflationary pressures.
On the other hand, call money rates moved up at the overnight call money market owing to modest demand from borrowing banks in the face of tight liquidity conditions in the banking system.
The Reserve Bank of India (RBI) in its first bi-monthly monetary policy in the current fiscal left the short-term lending rate or repo rate unchanged at 7.5 per cent and the cash reserve ratio static at 4 per cent. The statutory liquidity ratio (SLR) has also been retained at 21.5 per cent.

The benchmark 8.40 per cent government security maturing in 2024 dropped to Rs 103.9875 from Rs 104.43 previously, while its yield shot-up to 7.79 per cent from 7.72 per cent.
The 8.60 per cent government security maturing in 2028 declined to Rs 106.5850 from Rs 107.03, while yield rose to 7.79 per cent compared to 7.74 per cent.
The 8.27 per cent government security maturing in 2020 slipped to Rs 101.98 from Rs 102.28, while yield jumped to 7.79 per cent against 7.72 per cent.

The 8.15 per cent government security maturing in 2026 drifted to Rs 102.78 from Rs 103.31, while yield zoomed to 7.78 per cent from 7.71 per cent.

The 8.28 per cent government security maturing in 2027 and the 8.83 per cent government security maturing in 2023 and 9.20 per cent government security maturing in 2030 also quoted substantially lower at Rs 103.50, Rs 105.99 and Rs 111.55, respectively.
The interbank call rates opened firm at 7.40 per cent as compared to 6.25 per cent yesterday and moved in a range of 7.60 per cent and 6.50 per cent before finishing at 6.60 per cent.
Meanwhile, the Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 17.17 billion in 6-bids at the 1-day repo auction at a fixed rate of 7.50 per cent this morning, while it sold securities worth Rs 421.90 billion from 52-bids at the 1-day reverse repo auction at a fixed rate of 6.50 per cent late yesterday.