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"Despite the end of the fortnight being so close and repo bids rising so sharply, if call rate does not ease, it means liquidity is very tight," said a dealer with a state-run bank.
Around Rs 20,000 crore is suppose to move into government coffers this week as the first installment of advance tax payments for the current financial year.
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| Demand is typically low in second week of the Reporting Fortnight, as most banks prefer to cover reserve needs in first week itself.
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| G-sec: Sharply down
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| Government bond prices ended sharply down on Thursday as traders feared there may be no relief from the rising inflation and tight monetary policy regime in the near term. Gilt prices have tumbled almost a rupee since Tuesday on these fears.
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| Sentiment weakened further on Thursday ahead of the release of weekly inflation data on Friday. The 10-year benchmark 8.24 per cent, 2018 paper closed at Rs 98.45 or 8.47 per cent yield-to-maturity compared with Rs 99.13 or 8.36 per cent on Wednesday.
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| Corporate bond: Rising yields
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| The yields in the secondary market rose by 10 basis points, tailing a rise in the yields of government bonds, on fears that Friday's headline inflation for the week to June 7 may rise further, dealers said.
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| Market participants expect the RBI to take some stern measures to curb inflation, if headline inflation rises further.
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| The most traded 8.24 rose by 10 basis points, 2018 gilt was on Thursday closed at 8.47 rose by 10 basis points compared with 8.36 rose by 10 basis points on Wednesday.
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| Some mutual funds, along with foreign banks, were net sellers on Thursday, while private banks and provident funds were buying such bonds, dealers said.
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| Housing Development Finance Corporation's two-year bonds traded at 10 per cent compared to 9.95 per cent on Wednesday.
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| Power Finance Corporation's five-year bonds traded at 9.83 per cent on Thursday compared with 9.85 per cent on Wednesday, whereas State Bank of India's Upper Tier II bonds at 9.87 per cent. |
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