At close, call rates were seen at 11-11.25 per cent. Elsewhere, the National Stock Exchange pegged its overnight Mibid and Mibor at 11.09 per cent (11.78 per cent) and 11.32 per cent (12.02 per cent) with the fortnightly one at 10.45 per cent (10.46 per cent) and 11.09 per cent (11.39 per cent).

FORECAST: Call rates seen at 11.40 per cent levels on Wednesday.

Spot Dollar

The rupee weakened in intra-day trades to a low of 43.45/46 on Tuesday. Opening the day at 43.38/39 from its last close at 43.37/38, inter-bank interest for dollar saw the rupee go lower to 43.3850/3950 by mid-session. "Trades were dull today... the State Bank was seen buying dollars at 43.38 levels, presumubably for a corporate", a dealer said, adding: "Only mild corporate demand for dollars was seen... corporates are interested to buy dollar only below 43.40 levels". The State Bank's dollar-interest pulled the rupee down to its intra-day low of 43.45/46 where it hovered for a while before closing a shade higher at 43.43/44. Promise of stability on the political front saw the rupee gain to 43.30 levels on Tuesday. Cash/tom was quoted at 1.50/1.75 paise, cash/spot at 0.75/0.8750 paise with tom/spot also going likewise (0.75/1 paise).

The Reserve Bank fixed its reference rate for the dollar at 43.37 from its previous day's 43.33. The Euro opened at 46.10 (46.00) against the Euro, went to an intra-day high of 46.34 (46.00) to finally close at 46.32 (46.09).

FORECAST: Rupee seen at 43.40 levels on Wednesday.

Forward Premiums

Forward premiums held steady on Tuesday. The six-month annualised forward closed 5.32 per cent (5.21 per cent) with the one-month premium at 5.33 per cent (5.46 per cent). "There was little interest for forward dollars... premiums held steady. The perk in annualised forward covers is on account of a weaker spot-rupee at 43.45 levels, and firm call rates at 11.50 per cent levels", a dealer with a US-based bank said. October premiums finished unchanged at 11/12 paise with April at 127/128 paise (126/128 paise) and May at 147/149 paise (146/148 paise). "FIIs pulled out around $39 million from the equities market on Monday after bringing in over $40 million last week end. As seen during April-July, FIIs are not expected to sustain the investments in the stock markets.

On the whole, sentiment in the forwards is positive... the new government led Atal Bihari Vajpayee is expected to initiate major economic reforms paving the way for large investment flows into the country", a dealer with a European bank said.

FORECAST: Six-month annualised forward cover seen at 5.30 per cent levels on Wednesday.

Gilts

Dull trades were seen in the bond market on Tuesday. The 11.90 per cent 2007 was seen at Rs 102.84 (Rs 102.86) with the 11.75 per cent 2006 at Rs 102.62 (Rs 102.64). "Bond prices were up in early trades, but fell on profit taking", a dealer with a primary dealership said, adding: "Reports of an impending cash reserve ratio cut had impact on bond prices". The 11.99 per cent 2009 was dealt at Rs 102.52 (Rs 102.55) with the 12.40 per cent 2013 at Rs 103.53 (Rs 103.57). Trading sentiment has turned lacklustre over the last couple of weeks. This has been compounded after the payout for the Reserve Bank's auction of the 11.90 per cent 2007 and 12.60 per cent 2018 for Rs 3,000 crore and Rs 2,000 crore respectively was made last Friday.

"There are no major inflows this week... trading interest is expected to hold dull in the run up to the Reserve Bank's busy-season credit policy", a dealer with a European bank said.

FORECAST: Gilt prices seen holding firm on Wednesday.

Compiled by Raghu Mohan