The non-statutory liquidity ratio (non-SLR) market is expected to see range-bound trading this week.
Though liquidity will not be an issue, inflation concerns will rein-in the enthusiasm of the market.
Before initiating fresh trading/ investment positions, participants will take a cue from the twin auction of government securities slated for Tuesday.
The difference in yields (spread) between the best rated five-year corporate bonds and the corresponding maturity gilt will hover around 50 basis points.
Last week, the spread eased from 60 basis points to 50 basis points. This week yields on corporate bonds may come off only a bit.
Yields on corporate bonds had softened last week by around 30-40 basis points.
Good interest is emerging in public sector unit oil bonds and the Unit Trust of India special bonds.
On Saturday, the 6.96 per cent 2009 oil bonds were last dealt at an yield of 6.42 per cent and the six per cent 2010 UTI special bond was last dealt at an yield of 6.35 per cent.
The attraction of these bonds lies in the fact that they are going at a spread of about 35 basis points (as against 25 basis points in the previous week) over the corresponding maturity gilt.
Corporates and banks may prefer to wait until the Reserve Bank of India
