Benchmark 10-year government bond yields on Tuesday surged by 9 basis points, the most in eight months, after the election results showed that the NDA alliance would win a narrower majority than was expected. The rupee fell by 38 paise to 83.53, down 0.47 per cent, its worst single-day percentage fall since February last year. The 10-year yield ended at 7.0382 per cent as against its previous close at 6.9438 per cent. Yields rose to 7.09 per cent in intra-day business, a rise of 12 basis points. There was uncertainty in the bond market as results showed the NDA is unlikely to win a decisive majority as predicted by exit polls over the weekend. The narrow majority of the NDA is likely to deter the incoming government from making any major reforms, money market sources said. The market was hoping that the Reserve Bank of India (RBI) move to transfer a record Rs 2.1 lakh crore dividend to the government would result in a reduction in fiscal deficit and government borrowing. There’s apprehension about the possibility of fall in capital flows. The RBI intervened in the market by selling dollars to prevent a steeper slide in the currency, said a dealer.
