· FII limit auction for gilts and corporate bonds now totaling to USD 10 billion.

· RBI undertaking larger bond purchase auction under open market operation (OMO). Yields dropped further from 8.69% when RBI Deputy Governor commented that that the central bank would continue to conduct open market operations (OMO)/ bond purchases to tide over the ongoing liquidity crisis in the banking industry.

View - With growth ( 6.9 percent in Q3 of 2011) & inflation (Primary Articles Inflation at 7.74% vs 9.08% (WoW) & Food Inflation at 8% vs 9.01% (WoW)) showing a down trend, the markets are expecting an easing of monetary policy in the near future (1st half of 2012) which will be positive for bonds. However, fiscal deficit & the government's borrowing program are weighing on the fixed income markets. Fixed income markets are looking attractive in medium term as RBI is expected to relax its monetary stance in near future.

Find below CP/CD yields -

Issuer	Instrument	Rating	3 months	6 months	12 months
PSU Bank CD's	CD	P1+	9.25%-9.30%	9.45% - 9.50%	9.60%-9.65%
Private Bank CD's	CD	P1+	9.35%-9.40%	9.55% - 9.60%	9.65%-9.70%
NBFC	CP	P1+	9.50%-9.55%	9.80%-9.85%	9.85%-9.90%
NBFC  - High yielding	CP	P1+	10.30% - 12.25%	10.90%-12.30%	11.30%-12.40%

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