India’s 10-year bonds gained the most in almost two weeks after the government sold debt at lower yields than traders’ forecast at an auction on September 4, suggesting increased demand for fixed-income securities.
Yields on benchmark notes due 2019 fell for the fourth time in five days after the country sold Rs 5,000 crore ($1 billion) of the securities at 7.5 per cent, less than the 7.53 per cent predicted by investors in a Bloomberg News survey.
It also auctioned bonds due in 2015 and 2027 at 7.45 per cent and 8.19 per cent, compared with median estimates of for 7.46 per cent and 8.25 per cent.
The yield on the 6.90 per cent note due July 2019 dropped 18 basis points to 7.29 per cent as of the 5:30 pm close in Mumbai, according to the central bank’s trading system.
That is the biggest slide since August 26. The price rose Rs 1.19 per Rs 100 face amount, to Rs 97.27. A basis point is 0.01 percentage point.
Bonds also rose on speculation the Reserve Bank of India will continue purchases of existing debt to boost demand in the market.
In the derivatives market, the 10-year bond future maturing by December 31 was traded at 8.10 per cent, while the contract due March 31 was at 8.29 per cent, according to the Web site of the National Stock Exchange of India.
Re gains for a fourth day
The rupee rose for a fourth day after the Group of 20 nations agreed on measures to strengthen the global economic recovery, boosting appetite for riskier emerging-market assets.
The currency rose the most in more than a week as stock gains added to optimism that global investors will increase holdings of local assets.
The rupee also strengthened as currency traders in the overseas non-deliverable forwards market pared bets for declines for a fourth day.
The rupee advanced 0.5 per cent to Rs 48.665 a dollar as of the 5 pm close in Mumbai, according to data compiled by Bloomberg. That was the biggest gain since August 28.
Offshore contracts indicated that the rupee would trade at Rs 48.77 to a dollar in a month, compared with expectations of Rs 49 at the end of last week.
