Synopsis
Last week, the benchmark bond yield dropped below the crucial 6 percent mark to 5.96 percent after the central bank announced a Government Securities Acquisition Programme (GSAP) for Rs 35,000 crore, which will be conducted on May 20. The gauge had risen to 6.23% in the first fortnight of March.
MUMBAI: India’s ‘concentrated’ yield management is having an unusual effect on sovereign bonds. While traders want the papers for short-term gains, long-term buyers including insurers are staying away, potentially triggering market volatility in a year that would witness record borrowing.
“We have shied away from the benchmark paper for the past three months,” said Arun Srinivasan – Head Fixed Income – ICICI Prudential Life Insurance Company.
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