<p>Investors made merry on the first trading day of June, as benchmark indices closed at the respective record highs, and bond yields eased to 18-month low on the hope of repo rate cut.</p>.<p>Marking its biggest gain of the calendar year, BSE's 30-share Sensex zoomed 553.42 points (1.39%) to close at 40,267.62 points. The momentum in the markets was buoyed by the fact that they are expecting a huge rate cut in the ongoing monetary policy committee (MPC) meeting of the Reserve Bank of India.</p>.<p>Despite the rise on the indices, the overall market breadth was negative -- with BSE witnessing 1,192 advances, as against 1,416 declines. Analysts attribute this phenomenon to the fact that overall market fundamentals are weak, with subdued earnings season coupled with average management commentary.</p>.<p>On the other hand, broader index, NSE's 50-share Nifty also gained 166 points to close at 12,088.55 points.</p>.<p>The bond yield also eased to an 18-month low figure. The yield of 10-year G-secs stood at 6.991%, dropping to sub-7% level for the first time since November 23, 2017 -- the last time bond yields were lower than this.</p>.<p>Bonds have an inverse relationship to interest rates - when interest rates rise bond prices fall, and vice-versa. Most bonds pay a fixed interest rate if interest rates in general fall then the bond's interest rates become more attractive so people will bid up to the price of the bond.</p>.<p>Analysts and experts alike are expected at least 25 basis points rate cut, as the country's growth has been dragged to a 20-quarter low on the back of subdued consumption. The markets also expect the central bank to announce measures to ease the liquidity position in the markets. On Friday, the official data put out by the government said that country had clocked a GDP growth of mere 5.8%, thereby ceding its slot as the world's fastest-growing economy to China -- which grew by 6.4% in the March quarter.</p>
<p>Investors made merry on the first trading day of June, as benchmark indices closed at the respective record highs, and bond yields eased to 18-month low on the hope of repo rate cut.</p>.<p>Marking its biggest gain of the calendar year, BSE's 30-share Sensex zoomed 553.42 points (1.39%) to close at 40,267.62 points. The momentum in the markets was buoyed by the fact that they are expecting a huge rate cut in the ongoing monetary policy committee (MPC) meeting of the Reserve Bank of India.</p>.<p>Despite the rise on the indices, the overall market breadth was negative -- with BSE witnessing 1,192 advances, as against 1,416 declines. Analysts attribute this phenomenon to the fact that overall market fundamentals are weak, with subdued earnings season coupled with average management commentary.</p>.<p>On the other hand, broader index, NSE's 50-share Nifty also gained 166 points to close at 12,088.55 points.</p>.<p>The bond yield also eased to an 18-month low figure. The yield of 10-year G-secs stood at 6.991%, dropping to sub-7% level for the first time since November 23, 2017 -- the last time bond yields were lower than this.</p>.<p>Bonds have an inverse relationship to interest rates - when interest rates rise bond prices fall, and vice-versa. Most bonds pay a fixed interest rate if interest rates in general fall then the bond's interest rates become more attractive so people will bid up to the price of the bond.</p>.<p>Analysts and experts alike are expected at least 25 basis points rate cut, as the country's growth has been dragged to a 20-quarter low on the back of subdued consumption. The markets also expect the central bank to announce measures to ease the liquidity position in the markets. On Friday, the official data put out by the government said that country had clocked a GDP growth of mere 5.8%, thereby ceding its slot as the world's fastest-growing economy to China -- which grew by 6.4% in the March quarter.</p>
