| Date: |
12-09-2014 |
| Subject: |
Bonds snap two days of falls as oil prices ease; CPI eyed |
|
MUMBAI: Government bonds gained on Thursday, snapping two days of losses after Brent crude fell to a two-year low, easing inflation fears a day before the release of data on consumer prices.
Bonds also benefited from market speculation that the Reserve Bank of India might soon conduct its first buyback with markets, as part of the 500 billion rupees ($8.22 billion) set aside in the 2014/15 budget to switch shorter debt with longer-dated papers.
In the previous two sessions, bonds had fallen on worries about earlier-than-expected US rate hikes, which could dent the big foreign inflows into Indian shares and debt markets.
"With CPI there's hope of a benign number, and if that comes to pass, a brief rally is likely," said Killol Pandya, a senior fixed-income fund manager at LIC Nomura in Mumbai.
"But the 10-year yield is unlikely to sustain below 8.45 per cent."
The 2024 10-year bond yield, which became the benchmark last month, closed down 3 basis points on the day at 8.51 per cent.
The yield on the 14-year 2028 bond, which was the most-traded, ended down 4 bps at 8.65 per cent.
Volumes on the electronic trading platform rose to 315.15 billion rupees ($5.17 billion) from 220.13 billion rupees on Wednesday.
Bonds gained after Brent crude fell to a two-year low below $97 a barrel, down for the sixth straight session as worries over ample supply and weak demand outweighed concerns that conflict in the Middle East could curb oil production.
India, the world's fourth largest oil consumer, imports about 80 per cent of its oil needs, making global crude prices important for its inflation outlook.
The country is due to release data on consumer inflation for August on Friday, which is seen edging down to 7.80 per cent from July's 7.96 per cent, according to a Reuters poll of analysts.
In the overnight indexed swap market, the benchmark five-year swap rate ended down 1 bp at 8.01 per cent, while the one-year rate closed unchanged at 8.46 per cent.
Source : economictimes.indiatimes.com
|