The government bond (G-Sec) prices witnessed a significant fall across-the-board on heavy selling pressure from corporates and market participants after the Reserve Bank of India kept policy rates on hold.
On the other hand, call money rates recovered due to good demand from borrowing banks in the face of tight liquidity conditions in the banking system.
The apex bank kept the short-term lending rate, or repo rate, unchanged at 7.25 per cent and the cash reserve ratio (CRR) at 4 per cent, in its bi-monthly policy review, citing risk of inflation in the midst of poor monsoon and a possible increase in interest rates in the US next month.
The 7.72 per cent government security maturing in 2025 dropped to Rs 99.1725 from Rs 99.35 from yesterday, while its yield moved up to 7.84 per cent.
The 8.40 per cent government security maturing in 2024 dropped to Rs 102.4575 as against Rs 102.6425, its yield rose to 8.01 per cent.
The 7.68 per cent government security maturing in 2023 slumped to Rs 98.1350 compared with Rs 98.35, while yield edged high to 7.99 per cent.
The 7.88 per cent government security maturing in 2030, the 8.27 per cent government security maturing in 2020 and the 8.60 per cent government security maturing in 2028 also quoted substantially weak at Rs 98.99, Rs 101.14 and Rs 104.08, respectively.
The overnight call money rates rose to 7.15 per cent from Monday's closing level of 6.75 per cent after moving in a range of 7.20 per cent and 6.70 per cent in early trade.
Meanwhile, the Reserve Bank of India, under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 21.42 billion in 5-bids at the one-day overnight repo auction at a fixed rate of 7.25 per cent this morning, while its sold securities worth Rs 52.67 billion from 29-bids at the reverse repo auction at a fixed rate of 6.25 per cent late yesterday.
