n Sovereign yields opened today with a gap-up, ranging within 6-15bps for the 5 to 12-year maturities from yesterday's close. While the union budget-induced bearishness seemed less severe today, participants were evidently reluctant to initiate directional trades. The broader sentiment remained skewed towards an upside on yields.
n Total volumes on the NDS-OM platform closed at INR 83.80 bn, 59% of which was concentrated in the 12 and 5-year bonds. Yields across maturities closed 6-7bps below their opening levels (7.94% GoI 2021 closed at 7.30% while 6.05% GoI 2014 was 1bp higher at 6.46%), indicating buying interests of those who believed the 'end of day' correction in yields was sufficient in the current environment.
n Excess cash of the banking system stood at INR 1.39 tn under RBI's reverse repo window, reinforcing the system's cash comfort in FY10 so far. Total overnight volumes too increased by INR 16.50 bn to INR 790.11 bn, earning lenders an average return of 2.94%.
n The INR 40 bn SDL auction for 3 states concluded with cut-off yields in the range of 7.93-7.97% with their spread over the equivalent maturing central government paper holding at 80-90bps. The bid-to-cover ratio for the auction was 2.46.
n Rates in the non-SLR segment were largely unmoved from yesterday's levels. While early morning trades indicated some sell-off at the longer end of the curve quoting the 10-year yield at 8.70% (up 5bps), yields on corporate papers by market close reverted lower to remain unchanged.
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