Bond yields fall on auction cut-offs

Bond yields closed lower on Friday, taking comfort from bullish cut-offs in a Rs 14,000-crore ($2.66 billion) bond auction, indicating strong demand from banks in a low credit growth environment.

The 10-year benchmark bond yield ended at 8.22%, sharply lower than Thursday’s close of 8.33%.

“The bullish cut-off in the 8.79% and 7.83% (bonds) shows robust investor appetite, considering that the cut-off (price) levels were higher than the prevailing market levels at the time of bidding,” said Bekxy Kuriakose, head of fixed income at L&T Investment Management.

After markets closed, RBI said it bought back Rs 8,471 crore of bonds versus a target of Rs 12,000 crore. Total volumes on RBI’s electronic trading platform were Rs 25,290 crore, more than double the average daily volume.