Overnight rates ruled higher at nearly 9 per cent on Monday. Opening the day at 8.70-8.90 per cent, call rates ruled at these levels for most of the day. "Lenders appeared to be wanting to push up rates. A few state-run banks were seen shying away in early and mid-session trades. The market was fairly active", a dealer with a US-based bank said. By close of trades, call rates had softened to 8.40-8.50 per cent.

Most of the deals were transacted in the region of 8.70-8.80 per cent level. Dealers said the slightly tighter call rates were on account of the Rs 5,000 crore outflow from last Wednesday's twin-bond auction of the 12.32 per cent 2011 and the 12.40 per cent 2013. "The outflow occured towards the end of the Reporting Fortnight when demand for funds is low, but is impacting in the early part of a new fortnight, more so because of advance tax outflows this week", a dealer with a European bank said.

Elsewhere, the National Stock Exchange's overnight Mibid and Mibor werepegged at 8.63 per cent and 8.80 per cent with the 14-day ones at 8.58 per cent and 9.32 per cent.

FORECAST: Call rates seen at 8-25-8.50 per cent levels on Tuesday.

Spot Dollar

The rupee ruled rangebound against the dollar on Monday. Opening the day at 43.11/13 from its last close at 43.14/15, corporate demand for dollars saw the rupee go its intra-day low of 43.17/18 by mid-session. "The rupee went to a low of 43.17/18 by mid-session on corporates demand for dollars. Quite a few state-run banks were seen buying dollars at 43.1450/1550 levels. Trades were moderate", a dealer with a brokerage said. At close, the rupee was seen a tad stronger at 43.16/17. "The dollar seem to have topped out, and will at best, test the 43.25 mark unless something untoward happens", a dealer with a European bank said.

Cash/spot closed at 0.75/1 paise (2/2.25 paise) with cash/tom at 0.25/0.50 paise (1.75/2 paise) and tom/spot quoting unchanged at 0.25/0.50 paise. The Reserve Bank fixed its reference rate for thedollar at 43.17 against its previous fix of Rs 43.15. Elsewhere, the rupee opened the day at 44.17 (44.59) against the euro, went to an intra-day low of 44.97 (44.42) to close at 44.57 (44.64).

FORECAST: Rupee seen between 43.09 and 43.16 on Tuesday Forward Premiums

Forward premiums moved in a narrow two to three paise band, and closed a tad lower on Monday. The benchmark six-month annualised forward cover closed at 5.02 per cent (5.05 per cent). "There was some scattered receiving today, but paying was next to nothing", a dealer with a Gulf-based bank said. August dollars closed at 37/39 paise (38/40 paise) with September at 54/56 paise (54/57 paise) with January at 141/143 paise (141/144 paise) and February at 165/167 paise (167/169 paise). "Sentiment is still nervous in the spot segment. Corporates are buying spot-dollars whenever it eases. Forwards are, however, holding firm as the spot-rupee is not volatile", dealers said.

FORECAST: Six-month annualised premium seen between 4.96 and 5 percent on Tuesday.

Gilts

Bond prices held largely stable on Monday. Medium-terms papers, which were in favour towards the close of last week, moved in a narrow two to three paise band, and ended a tad high. The 12.50 per cent 2004 quoted at Rs 104.31 and 104.36 (Rs 104.33) with the 11.50 per cent 2004 going at Rs 100.75-100.78 (Rs 100.74). The 11.19 per cent 2005 was seen at Rs 99.26 levels (Rs 99.23-99.28). "Bond prices held stable despite slightly tighter call rates at 8.90 per cent levels. Most players are adopting a wait and watch policy. Advance tax outflows could see bond prices fall a bit later in the week", a bond dealer with a primary dealership said.

The 12.32 per cent 2011 quoted at 102.17 levels (Rs 102.18-102.20); 12.40 per cent 2013 at Rs 101.71-101.73 (Rs 101.70); and the 12.60 per cent 2018 between Rs 101.36-101.38 (101.34 and Rs 101.39).

FORECAST: Long-dated bond prices may fall by 1 to 2 paise on Tuesday.