Foreigners’ appetite for local debt waned after Donald Trump’s election win stoked speculation of higher US inflation and pushed up the dollar, given the President-elect’s plans to impose tariffs around the globe.
Earlier today, the MPC left key repo rate unchanged at 6.5 percent for the seventh time in a row, in line with the market expectations, with its focus firmly on bringing inflation down.
The outstanding amount on the current benchmark bond, as of January 29, stood at Rs 1.85 lakh crore, much beyond the limit of Rs 1.5 lakh crore, as per RBI data.
"For the past few days, the market has been reacting with a fear after listening to RBI governor I would say it is positioning itself with a view of no rate cut now," Manish Wadhawan of HSBC told CNBC-TV18.
Buoyed by the low inflation numbers and hopes of rate cut, experts see the yield of new 10-year bonds to be auctioned on Friday trading at 6.75-7.30 percent over next one year.
Reliance Industries may price as early as Thursday a USD 1 billion 10-year bond that will be used to fund capital expenditure in its US shale gas business, two sources with direct knowledge of the deal said.
The European Union is racing to draft a second bailout package for Greece to release vital loans next month and avert the risk of the euro zone country defaulting, EU officials said on Monday.
Systemic liquidity is improving as government spending comes into the system, says Sandeep Bagla, ICICI Securities Primary Dealership.
Markets have remained dull and we expect them to continue to remain dull. However, the LAF numbers released yesterday have shown some improvement in the liquidity situation overall which could bring in some buying interest. The 10-year bond is likely to trade around 8.15%, says RVS Sridhar, Axis Bank.