The 7.46 per cent 2017 paper came in for some selling immediately after the auction today.
However, the gilt recovered to close at a yield of 7.3690 per cent (price: Rs 100.80) as against the auction yield of 7.3072 per cent (auction cut-off price of Rs 100.79). The Centre mopped up Rs 4,000 crore through the auction of this paper, which was re-issued.
While the market was expecting a cut-off of around Rs 100.72, the RBI surprised it by giving a higher cut-off of Rs 100.79. The 15-year paper was trading at Rs 100.73-100.75 (yield: 7.37 per cent) per cent in the morning.
Post-auction, market players holding the 15-year paper, sold to make gains. The gilt touched Rs 100.75 and buying support emerged at this level. The paper was last dealt at Rs 100.80 (yield : 7.3690 per cent).
The paper got oversubscribed nearly 3.5 times. The RBI received 253 competitive and 18 non-competitive bids, aggregating Rs 13,923 crore and Rs 50.850 crore, respectively. The apex bank accepted 18 competitive bids for Rs 3,949 crore and all the non-competitive bids for the full amount.
With the auction of this paper, the Centre has completed 76.30 per cent of its budgeted gross borrowing programme of Rs 1,42,867 crore for fiscal 2002-03.
With no auction slated for this month and the RBI expected to announce a rate cut in the credit policy, players expect this paper to edge up to touch Rs 100.90 over the next few days.
They feel the RBI is unlikely to come out with an open market operation sales as every 10-15 paise increase in prices will be accompanied by sell-offs, thereby keeping the yield from dipping.
