Mumbai, Nov. 22: Interest rates are continuing their downward course, as was evident today when yields of key government securities slumped to a new historic low.
Yield on the benchmark 10-year security today closed at a new low of 6.43 per cent a massive fall from its previous close of 6.52 per cent and 6.90 per cent prevailing last month. Dealers said that the rally in security prices was largely due to upbeat market sentiment as the Reserve Bank of India (RBI) did not announce a fresh sale of securities to absorb liquidity.
Apart from the 7.40 per cent 2012 security that ended the day positive, most of the other securities also ended positive. These included the 11.50 per cent 2011 that closed at Rs 133.55 against Rs 133 yesterday. Dealers now opine that the market is likely to remain range-bound over the next few days.
The new low touched today only amplifies the low interest rate regime prevailing in the country and it comes after yesterday’s move by the State Bank of India (SBI) to bring down interest rates on its deposits.
The country’s largest bank on Thursday brought about a second round of cuts in its deposit rates ranging from 25-50 basis points across various maturities.