Mumbai, Dec. 4: Government security prices firmed up today after a roller-coaster session, helped by remarks that the Centre does not intend to disturb interest rates.
The spurt was fuelled by statements from finance minister Jaswant Singh on Tuesday that the government would bring down interest rates on small savings.
Today however, the gains evaporated when the ministry of labour said the interest rate on employees provident fund (EPF) would stay at 9.5 per cent for now. Late in the day, the finance secretary came out with a statement, saying the government had no plans to alter rates.
Gilt prices, which had fallen early in the session, bounced back. The recovery in long-dated papers was sharper, with the Reserve Bank of India (RBI) planning to auction an 8.35 per cent 2022 security on Thursday. There are hopes in the market of a higher yield.
The benchmark 10-year paper today finished at Rs 107.22 against Tuesday’s close of Rs 107.07. Similarly, the 11.50 per cent 2011 bond ended at Rs 134.21 over Rs 134.07.
Unlike the bond market, bourses went in for another day of what many analysts are calling a correction. The Bombay Stock Exchange (BSE) sensex ended at 3207.36, down 22.78 points from 3230.14 on Tuesday.