Bond yields closed flat on Thursday ahead of Friday?s Rs 12,000 crore bond sale, despite disappointment the central bank did not buy the full amount of bonds it had offered to at a buy-back auction.
The yield on the most traded 6.07%, 2014 bond ended at 6.53%, one basis point above Wednesday?s close.
The 6.90% bond maturing in 2019 ended steady with Wednesday?s close of 6.86%.
Volumes were a heavy at Rs 9,355 crore on the central bank?s trading platform. There were no deals in the benchmark 10-year bond, 6.05%, 2019 bond.
?The market was disappointed with the buyback results because the central bank did not buy the whole amount and also did not give any yield signal ahead of the policy,? said a senior trader with a foreign bank.
The central bank bought Rs 3,589 crore of bonds after offering to buy up to Rs 6,000 crore?the fifth consecutive auction where it has bought less than the indicated amount. The cut-off yields were in line with market expectations.
The central bank has so far bought back over Rs 33,000 crore of bonds since April and has pencilled in a total Rs 80,000 crore worth of buy backs by September-end.
?Now the market will look at tomorrow?s auction which is expected to be well bid because of the papers selected are in demand,? the trader said.
