Bond prices surged by 50 paise after interest rates were left untouched by the Reserve Bank of India (RBI) in its annual monetary policy for 2006-07. Dealers in the bond market welcomed the move. "The fact that rates were untouched and that there is sufficient liquidity currently implies that there will be a fall in the yields in the near-term. However, liquidity could become with higher credit offtake in June or July," said a dealer at a private bank.While in the near term, bond prices might rise, dealers said that inflationary pressures particularly oil prices were still a concern. Mr Mohan Shenoi, Group Head - Treasury, Kotak Mahindra Bank, said that the fundamental reasons for bearishness in the bond market such as continued supply of central government papers, persistently high global oil prices, and the rising interest rate stance in the major economies of the world continued to remain and could assert themselves in the days ahead. He added that a neutral stance in the credit policy in January this year when the liquidity situation was very tight and a hike now when there was a surfeit of liquidity would have given the right signals to the market.The 9.39 - 5 year-2011 paper opened at Rs 109.50 (7.16 per cent YTM) and ended at Rs 110.05 (7.04 per cent YTM), higher than Tuesday's close at Rs 109.45 (7.18 per cent YTM).The 7.59-10 year-2016 paper opened at Rs 100.30 (7.55 per cent YTM) and closed at Rs 101.22 (7.41 per cent YTM), up from Tuesday's Rs 100.25 (7.55).
