Mumbai: Benchmark yields barely budged on Monday as the record ₹2.69 lakh crore dividend payout declared by the Reserve Bank of India (RBI) on Friday fell short of market expectations of ₹3 lakh crore. The RBI had paid ₹2.1 lakh crore dividend to the Centre last fiscal. The benchmark 10-year bonds closed at 6.25%, down by one basis point from the previous session.
Shorter-term yields are, however, expected to trend lower going ahead given the comfortable liquidity, steepening the yield curve.
Returns on all three tenures of treasury bills-91-day, 182-day, and 364-day-have largely been the same over the past three auctions, reflecting easy . Short tenured with maturity between 91 days and 364 days are likely to yield around 6.65% in the upcoming auction on Wednesday, nearly six basis points lower than the previous one. These yields are expected to be flat across the three tenures, similar to auctions in the previous weeks.
“We have over ₹70,000 crore of extra liquidity this week which was not factored in because of some maturity payouts of , in addition to the dividend. This can likely lead to softer yields of T-bills in upcoming auctions, as short-tenured assets would benefit the most,” said Mataprasad Pandey, vice-president at Arete Capital Services.
“The extra liquidity can also lead to some cut in borrowings of T-bills like last year,” Pandey said.