Bonds tumble across the board

Government bonds today tumbled across the board on renewed hectic selling after sentiments turned distinctly weak due to a clouded interest rate outlook and rising world oil prices on the back of a warning by global rating agency Standard & Poor's to contain the country's high fiscal deficit and debt burden.

Key gilts across the spectrum plunged by 40-90 paise on frenzied selling with the fall in the longer dated papers more pronounced, dealers said.

The 7.38% 2015 stock dipped by over 60 paise to Rs 102.15/20 with the yield rising by eight basis points to 6.56% and the 7.37% 2014 bond dipped by 40 paise to Rs 104.90/105.10.

Actively traded 8.07% 2017 paper slid to Rs 111.30/40 from Tuesday's close of Rs 111.70/80, the 6.25% 2018 stock dropped to Rs 95.75/25 from Rs 96.35/50, the 6.35% 2018 bond tumbled to Rs 94.50/00 from Rs 95.40/60 and the 6.35% 2020 slipped to Rs 94.50/95.00 from Rs 95.40/60.

Crude oil prices jumped to $43.77 a barrel in early Asian trade due to supply constraints, fuelling fears of a rise in inflation.

Market speculation of a possible rise in interest rates after the us federal reserve cautioned about inflation fears that could raise interest rates weighed on bond values, dealers said.

S&P's warning to India of high fiscal deficit and debt burden further affected market sentiment, they added.