According to money market experts, the hectic buying by corporates during the day firmed up gilts prices. "Expecting a further hike in the gilts prices banks were buying medium and long term gilts," money market dealers said. However, there was no demand for short term papers.

Money market sources are of the view that the market is currently echoing the sentiments of the RBI which is aiming at a lower interest rate regime. In the last one week, the yield of 10-year paper has fallen from 12.25 per cent to 11.97 per cent. According to dealers, the yield of short-term papers have fallen by almost 100 basis points since the budget announcements.

The 11.40 per cent 2000 paper was traded at Rs 100.85 (Rs 100.60), 11.55 per cent 2001 paper at Rs100.89, 11.98 per cent 2004 paper at Rs 101.60, 12.50 per cent 2004 paper at Rs 103.60, 12.59 per cent 2004 paper at Rs 103.75 and 11.10 per cent 2003 paper at Rs 99.14 per cent, 11.19 per cent 2005 paper at Rs 97.75.

The gilts prices have shot up by almost 80 to 100 paise in short, medium and long term papers in the last one week after RBI slashed CRR by 50 basis points, bank rate by 100 basis points and repo rate by 200 basis points.