After the reduction in crude oil price eased concerns around fiscal slippage and inflation, 10-year benchmark bond yield hit a three month low on Friday. The 10-year government bond yield was trading at 7.761% versus previous day close of 7.823. Bond yield and bond price share inverse relationship. The rupee also gained ground for the second straight session and was last trading with gains of 1.12% at 72.63 versus previous close of 73.45.
In a note to its investors Edelweiss Financial said, "Bond markets were supported by favourable cues in the form of easing oil prices and an appreciating rupee".
Last month price of brent crude oil touched a high of over $86 per barrel for the first time in some 4 years and currently trades at more than two-months low of below $73. In the matter of just one-month international benchmark of crude oil price lost as much as 15.6%
Also economist at DBS bank in a note released on October 30 said that liquidity management measures by the central bank also supported Indian bond markets. Improvement in the bond market was also seen as US President Trump and Chinese President hinted at their willingness to talk over trade issue.
This year the rupee has lost its value by as much as 13.05% and foreign investors have sold $5.76 billion and $8.46 billion in the equity and debt markets, respectively.