Government security prices staged a rally, gaining more than Re 1 across the maturity spectrum as the Ayodhya tension came to an end today. The sentiment in the government security market which opened on a weak note in the morning, was upbeat by the afternoon. The yield on 10-year paper which closed at 7.58 per cent on Thursday fell to 7.42 per cent today. Money market dealers are expecting the rally to continue tomorrow on the back of improved sentiment.
In the foreign exchange market, forward premiums dipped due to a fall in the government paper yields that reduced the interest rate differential between the Indian and US markets. The six-month annualised premiums closed at 6.20 per cent as against Thursday
