Mumbai: Volume in the secondary market rose on Monday as mutual funds bought corporate bonds on expectation that the Reserve Bank of India may cut the repo rate on Mar 15 as the headline inflation number is seen sharply down Tuesday, dealers said.
A fall in the headline number strengthens the case for a rate cut by the RBI. As per NewsWire18 poll of 11 analysts, the headline inflation rate based on the Wholesale Price Index is likely to fall to 6.55 percent in January from 7.47% in December.

Corporate bonds worth 10.13 billion rupees were traded on Monday compared with 7.68 billion rupees on Friday, according to the Fixed Income Money Market and Derivatives Association.
Yields on corporate bonds were largely unchanged due to lack of cues. Yields on five-year corporate bonds were unchanged from Friday's close of 9.30-9.33 percent, while that on 10-year papers were at 9.24-9.26 percent compared with 9.22-9.24 percent.
In the primary market, Steel Authority of India's five-year bond issue received poor response from investors as the upper limit set by the company was low at 9.10 percent against the yield on five-year corporate bonds in the secondary market.
Power Finance Corp too has invited bids from merchant bankers on Thursday as the company is looking to enter into a swap deal on its five-year fixed rate bond issue placed Friday.

Merchant bankers have to bid for a spread over the two-year Indian Constant Maturity Treasury Benchmark, or INCMTBMK, for the first reset applicable for two-years, and over one-year INCMTBMK for subsequent reset.