Market Round Up

Updated: Oct 11 2003, 05:30am hrs
Call Money
Call rates fell moderately to close at 4.25/40% against the previous close of 4.35/40%. Opening the day at 4.40-4.50%, call rates softened on good supply of funds with most players having covered for their reserve requirements, even as there was an auction of twin bonds sucking out Rs 11,000 crore from the inter-bank system. Liquidity overhang far outweighed the quantum of the auction amount. Supply of funds is still very high, a State-owned bank dealer said. The liquidity will remain high even as the state development loan auction amounting to Rs 6,500 crore is scheduled for Monday. Continued inflow of dollars are still helping increase the liquidity conditions, another dealer added. The RBI received and accepted 37 bids for Rs 17,805 crore through its three-day repo window. Meanwhile, the National Stock Exchange of India (NSE) pegged its overnight Mibid and Mibor at 4.43% and 4.53% respectively.
FORECAST: Call rates seen subdued on Saturday.

Spot Dollar
The rupee finished lower by over 13 paise to close at 45.3850/3950 in the wake of dollar funds shortage and state-owned banks resorting to buy dollars. The rupee closed at 45.25/27 on Thursday. The rupee opened close to the previous close at 45.27/29 but lost ground to touch a low of 45.44 before recovering and closing at Rs 45.3850/3950. Shortage of dollar funds has resulted the players buying dollars. This was aided by the state-owned banks, which had resorted to buying dollars, a foreign bank dealer said. Many banks were seen selling forwards and buying dollars in the spot market leading to loss of value of rupee, another dealer said. In the forwards market, the premiums turned negative for the next eight months, with the highest discount to dollar was for the near months of October and November 2003 which closed at 10/8 paise. Meanwhile The RBI has fixed the reference rate for dollar at 45.38 against the previous rate of 45.33.
FORECAST: The rupee seen rising on Monday.

Forward Premiums
Forward premia crashed across-the-board taking the forwards for next 8- months into the negative pale. The premium for October and November touched a discount of 10/8 paise, which was unprecedented. The six- and 12-month annualised premia also touched new lows of 02% (0.32%) and 0.45% (0.15%) respectively. The shortage of dollar funds has resulted in the premiums entering the negative pale. The premiums going into negative against the spot rupee trend even surprised the market, a dealer said. Though the dollar outlook is not so strong in the global markets, the forwards cannot sustain the discount levels given the rising inflation due to oil price rise and the RBI intervention, another dealer added. The benchmark six-month forwards of February 2004 has closed at a discount of 6/4 paise (from positive of 6/7 paise). The premium on far forwards of August and September also plunged to 4/6 paise and 5/7 paise (16/17 paise and 18/20 paise) respectively.
FORECAST: Premiums seen correcting on Monday.

Gilts
Thee Government securities yields inched up on Friday, driven by a rise in inflation and auction of twin bonds to suck out the liquidity. The wholesale price inflation rose to 5.03 percent in the 12 months to September 27, compared with 4.72 per cent in the previous week, according to the Union commerce and industry ministry. The RBI has fixed a cut-off price of 105.51 Rupees at its auction of 6.17 percent 2023 bonds for a notified amount of 6,000 crore rupees (5.6997 per cent), which was in line with market expectations. The benchmark 10-year bond yield inched up to finish at 5.0635 per cent from the previous close of 5.0522 per cent. But it has shaved off nearly nine basis points since the start of the week to hit a record low of 5.0217 percent on Thursday. The auction announcement on Thursday to sell bonds from its portfolio have, however, put brakes on the rally in prices. FORECAST: Prices seen falling on Saturday.

Compiled by BSS Reddy