Bonds end 8-day decline

Bonds ended eight days of decline, rising from a six-month low as the government reduced fuel prices to damp inflation, which has prompted the central bank to raise interest rates five times in the past year.

The government cut the price of diesel by Re 1 a litre and that of petrol by Rs 2 a litre, M S Srinivasan, petroleum secretary, said today. India's inflation rate accelerated to a two-year high as prices of edible oils and vegetables rose, government data released today showed.

"The efforts of the government and the central bank will bear fruit sooner than later and we will see inflation correct downward,'' said Parthasarathi Mukherjee, treasurer at UTI Bank in Mumbai. "The 10-year bond yield will slide below 8 percent in a matter of days.''

The yield on the benchmark 8.07 percent bond due January 2017 fell 7 basis points, or 0.07 percentage points, to 8.02 percent as of the 5:30 pm close in Mumbai. The price, which moves inversely to the yield, rose 0.46, or 46 paise per 100-rupee face amount, to 100.35, according to the central bank's trading system.