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Our Bureau

Mumbai, Dec. 8

Bond prices rallied in the first half of trade before giving up most of its gains on Tuesday, said dealers. The markets opened on a bullish note after the RBI Governor's comments that inflation is supply driven and monetary policy is ineffective to control it, said a dealer with a public sector bank.

However, the prices crashed after reports that the Government is going to seek the Parliament's nod for extra spending. This raised fears in the market of excess supply. However, after the Finance Minister's clarification that the government will not borrow from the market, the prices recovered to close around 20 paise higher, added the dealer. The total traded volumes on the order matching system were lower at Rs 9,830 crore (Rs 11,805 crore). The 6.90-10 year-2019 benchmark paper opened at Rs 96.3 (7.44 per cent YTM) and touched an intra-day high of Rs 97.3 (7.29 per cent YTM). It weakened to touch an intra-day low of Rs 96.11 (7.47 per cent YTM) before recovering to close at Rs 96.42 (7.42 per cent YTM). It had closed at Rs 96.26 (7.47 per cent YTM) on Monday.

The 6.35 per cent-11-year-2020 paper opened at Rs 91.62 (7.55 per cent YTM) and closed at Rs 91.88 (7.51 per cent YTM), against the previous close of Rs 91.57 (7.56 per cent YTM).

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