Gilts register significant gains as Rupee gains - ICICI Bank : Treasury Research

Indian Government bonds opened higher tracking overnight gains in US Treasuries. Gilts registered significant gains intraday as sharp recovery in the Rupee aided sentiment. Measures announced by the Government with respect to coal regulatory bill and gas pricing policy further aided gains in Indian bonds. Prices received further support as the INR 140 bn auction met with firm demand with the cut-off yield coming in lower than expected for all the four securities offered on sale. The old benchmark 8.15% 2022 bond yield closed at 7.63%, as against previous close of 7.73% while the new 7.16% 2023 ended the day at 7.46%, as against yesterday's close of 7.56%.

India's call rate closed at 7.00% as against previous close of 6.90%. The RBI injected INR 545.95 bn (1st LAF) into the banking system today, as against INR 596.40 bn (gross) yesterday.

US Treasuries extended yesterday's gains amidst paring of bets over tapering of asset purchases by the Fed after Central Bank officials Lockhart and Dudley emphasized that the Fed's accommodative stance is likely to continue. Meanwhile, the response to the pending home sales data which came in sharply better than expected was largely muted. Markets would closely watch the Chicago PMI and University of Michigan confidence indicator slated to be released later in the day for further cues. The 10-year yield is currently trading at 2.45%, lower than previous close of 2.47%. (17:30 IST)

Source : Equity Bulls

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