|
|
MUMBAI: Benchmark government bonds fell on Monday, snapping a two-day winning streak on the back of some profit-taking and after foreign investors continued a recent steep selling spree.
Foreign investors sold a net $114.09 on Friday, according to market and regulatory data, bringing their total in June to $5.68 billion, as the rupee slumped to a record low and as the U.S. Federal Reserve signalled an end to its monetary stimulus.
The near-term outlook for bonds thus remains weak, as the falling rupee is seen virtually ruling out a rate cut from the Reserve Bank of India at its July policy review.
Investors are also concerned about the government's borrowing cost in the coming two months when it will issue 40 percent of its market borrowing in the first half of fiscal year 2014.
Still, hopes for economic reforms from the government, including opening up sectors for foreign investment, are seen helping shore up the rupee and market sentiment.
"Our projection of stable policy rates and an unfavourable demand-supply balance are the key negatives," said Nagaraj Kulkarni, a senior rates strategist for South Asia at Standard Chartered Bank in Singapore.
The benchmark 10-year bond yield rose 2 basis points to 7.46 percent on Monday, after moving in a range of 7.39 percent to 7.46 percent in the day.
Traders said they would continue to closely monitor movements in the rupee to gauge its impact on the financing of the current account deficit, a key parameter being watched by the central bank as per recent policy statements.
The RBI is set to hold its board meeting this week in Chennai.
Total volume on the central bank's electronic trading platform was at 378.15 billion rupees, lower than the average 500 billion rupees seen until mid-June.
The five-year OIS rate gained 4 basis points to 7.38 percent and the one-year rate rose 4 basis points to 7.52 percent.
|
|
|