Indian Government bonds witness solid gains - ICICI Bank : Treasury Research

Indian Government bonds witnessed another day of solid gains on expectations of a rate cut by the RBI in the next policy meeting. Sentiment also remained upbeat ahead of the auction of new 10-year benchmark tomorrow. However, gilts pared some gains in later trading hours on profit booking. Markets would closely watch the cut-offs in the auction tomorrow. The benchmark 8.15% 2022 bond yield closed at 7.40%, as against yesterday's close of 7.46%.

India's call rate closed at 7.30%, unchanged from previous close. The RBI injected INR 954.45 bn (gross) into the banking system today, as against INR 1092.45 bn (gross) yesterday.

US Treasuries are trading marginally lower ahead of a slew of economic data releases, which is likely to show signs of recovery. Market awaits US CPI, initial jobless claims, housing starts and Philadelphia Fed manufacturing reading. Comments by Fed official Lacker that additional stimulus would not necessarily boost growth but is likely to increase the challenges for withdrawal of accommodation also weighed on Treasuries. Meanwhile, the benchmark yield had fallen by 4 bps yesterday following weaker than expected industrial production data. The 10-year yield is currently trading at 1.95% higher than previous close of 1.94%. (17:30 IST)

Source : Equity Bulls

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