Bond yields fall, rupee rangebound

MUMBAI: Bonds fell on Monday morning on concerns of upcoming supplies but all eyes are now on the OMO details that will be out today. Rupee was trading rangebound on back of choppy stocks and dollar weakness overseas.

"Trading is largely lacklustre with bonds trading weak. There is an auction scheduled this week, so there is pressure. But details of the OMO operation will be out today and that should decide further trend," says a dealer at STCI Primary Dealership.

At 12 noon, both the yield on the old 10-year benchmark 8.24% paper maturing in 2018 and, the new benchmark 6.05% paper expiring in 2019 were trading at 6.82% ( up 7 bps) and 6.56% (up 8 bps) respectively. The rupee was trading at 51.80 against the dollar, lower than its previous close 51.71.

RBI will buy back Rs 7,000 crores of bonds on Thursday, with an option to retain an additional Rs 3,500 crores, in an attempt to provide liquidity and improve appetite for debt. Ten state governments are scheduled to sell about Rs 15,000 crores of state development loans on Monday. As per the calendar of auctions, RBI is to sell securities worth Rs 12,000 crores this week.

The rupee was volatile in early trade on Monday as banks sold dollars tracking its weakness against majors overseas currencies. The dollar has been rising in recent days.