Call rates ruled lower from their previous closing levels, but still held firm on Wednesday between 7.75 per cent and 8.10 per cent. The market witnessed moderate activity with matching demand and supply. Most of the deals were conducted at 7.75 per cent level.

"Call rates were expected to go lower to atleast 7.50 per cent thereabouts, but held above 7.95 per cent for most of the day despite the Reserve Bank measures," dealers said. "Call rates are holding firm as liquidity is expected to tighten a bit on account of the advance tax outflows around 29th of this month," a dealer at a European bank said. The Reserve Bank of India received one application for Rs 23 crore at its three-day six per cent repo.

FORECAST: Call rates seen between 7.95 per cent and 8.10 per cent on Thursday.

Spot Dollar

The rupee bounced back after declining by eight paise against the dollar on Wednesday. Opening the day at 42.50/51 to a dollar, the rupee fell to an intra-day low of 42.56/57levels in early trades itself.

"A less than happy report by Duff & Phelps on the economy saw a few corporates rushing to buy dollars," dealers said. In later day trades, good dollar supplies and profit taking by banks saw the rupee gain to close the day at 42.49/50. Cash/spot ended at 0.75/1.00 paise while cash/tom and tom/spot went at 0.37/0.50 paise each. Elsewhere, the Reserve Bank of India fixed its reference rate for the dollar lower at 42.55 as against its previous fix of 42.51. The rupee, meanwhile, opened at 46.45 (46.70), went to intra-day low 46.52 (46.93) to finally close at 46.32 (46.68).

FORECAST: Rupee seen ranged between 42.47 and 42.52 against the dollar on Thursday.

Forward Premiums

Forwards were volatile on Wednesday. Near terms opened 4 to 6 paise higher in early trades, but far terms moved in 5 to 10 paise band throughout the day. "Forwards tracked the movement in the spot rupee," dealers said, adding: "premiums softened as the local currency came of its earlyweakness".

The six-month annualised forward premium was quoted at 6.96 per cent as against Monday's close at 7.43 per cent. "Most of the action was in the mid and far terms. There was a fair bit of paying earlier in the day, but profit taking and receiving saw premiums cool off by close of trades," a dealer at a brokerage said. In the near terms, March premiums closed at 15/17 paise (21-23 paise), April at 41/44 paise (49-51 paise) with May at 63/66 paise (70-75 paise). In the far terms, August dollars went at 142/145 paise (155-158 paise) and September 171/173 paise (185-188 paise).

FORECAST: Six-month annualised forward seen at 6.90-6.97 per cent levels on Thursday.

Gilts

The wholesale debt market of NSE recorded trades worth Rs 1,316.58 crore as against the previous days level of Rs 734.32 crore. The bond market witnessed positive sentiments on Wednesday as gilts prices firmed up by 30-35 paise in short and medium term papers.

The gilts prices opened at their previous closinglevel. However, due to hectic trading in bonds, the prices shot up sharply by 20-30 paise. "Increasing prices of gilts saw huge quantum of profit booking by banks," money market dealers said. According to dealers, a lot of selling pressure was seen in the market and banks were offloading short and medium term papers and booking profits. "Lot of buying interest was also witnessed in the bond market and banks were seen trading in papers like 11.40 per cent 2000 paper, 12.50 per cent 2004 paper and 11.55 per cent 2001 paper. The 12.50 per cent 2004 paper was traded at Rs 103.20 as against Rs 102.90.

FORECAST: Gilts prices are expected to firm up on Thursday.