Bond market activity likely to pick up

The government securities (G-Sec) market is jubilant. With the Finance Minister exempting debit market deals from transaction tax, the market is now looking forward to an increase in buying interests.

Prices shot up 50 paise after the announcement. However, profit booking has taken the sheen off the buoyant mood and prices fell by 30 paise in late deals. Market players are now expecting minor rallies but the weekly inflation data, which would be announced on Friday, may again play spoilsport. ‘‘There will be no fear of loss of liquidity now,” said a relieved Sudhir Joshi, chairman of the Fixed Income Money Market and Derivative Association of India (FIMMDA).

After the Union Budget announced a 0.15 per cent transaction tax on security tradings, traded volumes on National Stock Exchange’s (NSE) wholesale debt segment kept below Rs 2,500 crore. Most players have been on the sidelines of the market, awaiting a clearer picture on the vexed tax issue. Normally, volumes on NSE’s WDM hover around Rs 3,500-4,500 crore.

‘‘There would be minor rally. But each jump in the prices is likely to attract profit booking,” said Union Bank of India deputy general manager Bhaskar Sen.