Yields at 3-year excessive

The yield on 10-year benchmark authorities securities hit the 3-year excessive of seven.192 per cent in intra-day commerce within the cash market, reflecting inflationary issues and expectations of quicker hikes by the RBI within the months forward. The yield closed two foundation factors larger at 7.14 per cent — a 3-year peak.

On Friday, the yield had risen by 21 bps to 7.12 per cent after the RBI introduced its plan to deal with inflation and suck out liquidity from the market.

“Going ahead, heavy supply burden, absence of explicit RBI support and an early reversal in policy stance is expected to keep the bond markets jittery. We expect the new range of the benchmark 10-year yield (6.54 per cent securities 2032) to now shift to 7-7.30 per cent range in the near term,” Kotak Mahindra Bank mentioned in a report.

“The hawkish FOMC followed by a bold reversal in the MPC’s shift in policy guidance in favour of inflation over growth completely jolted the bond markets. While some relief through the HTM limit increase to 23 per cent till March 2023 was provided by the RBI, the conviction for explicit support to the bond markets was less visible thereby unnerving the markets,” it mentioned. The Sensex fell 483 factors, or 0.81 per cent, to finish at 58,964.57. The Nifty50 closed at 17,674.95, down 0.62 per cent.

The rupee settled nearly flat at 75.94 towards the greenback.