Indian Government bonds plunge - ICICI Bank : Treasury Research

Indian Government bonds plunged as sharp depreciation in the Rupee weighed on expectations of a rate cut by the RBI in the next policy meeting. Rise in Brent crude oil prices coupled with fresh supply of debt worth INR 140 bn on Friday further weighed on the gilts. Markets would closely watch the FY2013 Q4 BoP data due later this week for further cues. Meanwhile, amidst a volatile trading session, FIMMDA doubled the upper and lower yield trading limits for gilts across all maturities. The old benchmark 8.15% 2022 bond yield closed at 7.79%, as against previous close of 7.68% while the new 7.16% 2023 ended the day at 7.59%, as against yesterday's close of 7.50%.

India's call rate closed at 7.40% as against previous close of 6.80%. The RBI injected INR 368.90 bn (gross) into the banking system today, as against INR 629.25 bn (gross) yesterday.

US Treasuries are trading higher, paring yesterday's losses on value buying. Caution across the global asset markets further aided the safe haven demand for Treasuries. Markets also await the third reading of Q1 US GDP for further cues. Meanwhile, the benchmark Treasury yield rose by 7 bps yesterday as positive US economic data strengthened speculation of scaling back of asset purchases by the Fed going ahead this year. The 10-year yield is currently trading at 2.58%, lower than previous close of 2.61%. (17:30 IST)

Source : Equity Bulls

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