"Interest rate sentiment is benign, which is driving yields to fall," said Lakshmi Iyer, CIO (debt) and Head of Products at Kotak Mahindra Mutual Fund. "A falling bond yield is expected to lower corporate borrowing costs as companies would raise funds via bond sales at a lower rate.Going forward this trend can intensify if the GST bill gets passed in the monsoon session of parliament, dealers said.Some expect overseas investors to pump in around $2-3 billion by December to Indian debt securities. "Investors are more comfortable to build duration in their portfolios as expectations of a rate cut over the coming months have gone up. "Investor demand is strong for long term Government bonds," said Badrish Kulhalli, a fixed income fund manager at HDFC Standard Life Insurance. MUMBAI: Government bond yields have hit a new three-month low as investors rushed to buy government securities, reinforcing the belief that a good spell of monsoon has revived hopes for sharper future rate cuts.The benchmark bond yield has on Friday hit as low as 7.24% pushing prices up as some institutional buyers including commercial banks and insurers were seen buying sovereign securities, dealers said.

Source: Economic Times July 22, 2016 13:06 UTC