Government bond prices ended down On Thursday, breaking a six-day rising trend, as investors preferred to lock into profits, eyeing the sharp run-up in prices in the last few days.
Since November 20, the price of the 10-year benchmark 8.24 per cent, 2018 bond had risen by almost Rs 4. On Thursday, the 2018 paper settled at Rs 109.54 (6.8433 per cent yield to maturity)compared with Rs 110.01 (6.7790 per cent yield to maturity) on Wednesday.
Earlier in the day, the price of the 2018 paper had touched a high of Rs 110.50 on expectations of the rate cut, which were fanned by comments of a senior government official.
Call steady at 6.15%
The call money rate ended steady On Thursday because liquidity was adequate to meet banks’ daily reserve requirements, dealers said.
The one-day call rate ended at 6.15-6.20 per cent compared with 6.15-6.25 per cent on Wednesday.
CBLOs ended at a weighted average rate of 5.47 per cent versus 5.30 per cent.
Ample liquidity and subdued demand held the call rate around RBI’s reverse repo rate of 6 per cent On Thursday.
“There is a lot of money floating in the banking system, which is keeping the call rate low. Demand is also easing, as banks have overcovered reserves for the Reporting Fortnight,” said a dealer at a state-owned bank.
CD issues subdued on rate cut hopes
Primary issuances of certificates of deposit (CDs) were down On Thursday as mutual funds refrained from any purchases due to limited inflows in their schemes.
Even banks refrained from issuing any papers on anticipation that the Reserve Bank of India (RBI) may cut key rates by Saturday, dealers said. Around Rs 200 crore of CDs were placed On Thursday in the market compared with Rs 700 crore on Wednesday. Banks were the only investors in this paper.
This week, banks have already raised around Rs 3,000 crore through CDs.
