Bonds rangebound ahead of RBI buyback

MUMBAI: Bonds are trading rangebound ahead of a scheduled RBI buyback of securities tomorrow with dealers saying that details of the buy back will decide the further trend for the bond market. Rupee rose in line with rising stocks and global weakness for thed dollar in what analysts are calling "return of the global risk appette."

"With every slight movement in the rupee-dollar most importers and exporters are only unwinding their positions," says C Chandrasekhar, Senior Vice-President, Mecklai Financial. "However fundamentals are good for the local unit and I expect it to strengthen in the medium term," he said.

Dealers also spoke of oil related dollar demand seen around 51.35 with most expecting the rupe to trade in the range of 51.30-51.60 for the day.

The euro traded near recent one-month high on the dollar and briefly forged to an 11-week peak against the yen on Wednesday, buoyed by improved investor confidence after surprisingly upbeat US data.

Bond yields were trading in a narrow range on Wednesday, with the market awaiting details of the central bank's Rs 10,000 crores buyback auction on Thursday.

The yield on the new benchmark 6.05% paper expiring in 2019 traded at 6.47%, down 2 bps from Monday's close, after rising above 7% in the course of Friday. When yields fall, prices rise.

Call money rate was trading at 4.25% at 12 30 pm, 75 bps higher than reverse repo rate.