Bonds rangebound ahead of auction

MUMBAI: Bonds are trading rangebound ahead of a scheduled auction to take place on Friday. The new benchmark was trading at 5.90%, at 12.15pm largely unchanged from Wednesday's close. Dealers said investors are selling the securities to free up cash before the debt auction tomorrow. Further clues will emerge from the yields at which auctions are done, dealers said.

The government has announced an auction for two long dated securities for Rs 7,000 crore on Friday. The two papers are "7.46% Government Stock 2017" and "6.30% Government Stock 2023". Seven Indian states plan to sell a total of Rs 4,750 crores of 10-year debt today, RBI said last week.

Rupee too was trading at 48.90 against the dollar, same as the local unit's Wednesday close,on nervousness about further outflows from the stock market. BSE Sensex was down 1.1% to trade at 9096. Dealers said dollar was little changed against other major currencies overseas.

"These days tracking the euro has become one of the important trend setters for the rupee," says Navin Raghuvanshi, associate vice president at Develoment Credit Bank. "The activity from importers and exporters is much lesser," he said.

Overnight call money rate was trading at 4.10% at 12noon, near the reverse repo rate, as per CCIL.