The weak demand-supply dynamics continue to weigh on the government securities market , keeping yields still elevated. The weak demand from banks, insurance companies and pension funds cannot match the constant supply, said market participants. This has led participants to bid at higher yields in the previous auction, followed by which the Reserve Bank of India (RBI) rejected bids. Traders expect higher cut-off yield in the auction, which will be held on Friday.

“As majority of the rate cut is behind us, the support from rate cut cycle to the bond market is over. Yields are still elevated due to continuous supply where demand is not so strong,” said Gaura Sengupta, chief economist, IDFC FIRST Bank. She added that demand has not picked from real investors on account of lower inflows fo

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