Call Money
Call rates held rock-steady on Wednesday. Opening the day at 8-8.10 per cent, a shade higher from its previous close of 7.95-8.05 per cent, overnight rates ruled at these levels throughout the day. "There was enough liquidity, but hardly any demand," said a dealer with a primary dealership. There were no major inflows into the system. At close, call rates were seen at 8-8.15 per cent. "There was not much borrowing as participants expect the market to remain fairly liquid with the first stage of the cash reserve ratio (CRR) cut due on November 6 bringing in Rs 4,561 crore. Also, there is no news so far on any bond auction before the CRR cut takes effect," said a state-run bank dealer. Expectation of the bond auction discouraged lenders from taking a long-term view on interest rates, dealers said. Elsewhere, the NSE fixed its overnight Mibid and Mibor at 8.02 per cent and 8.09 per cent with the fortnightly one at 8.62 per cent and 9.37%.FORECAST: Call rates expected at 8-8.10 per cent levels on Thursday,seen perking up to 8.25 per cent on higher demand.
Spot dollar
The rupee moved in a thin range on Wednesday. Opening the day at 43.39/40 from its overnight close at 43.40/4050, the rupee held steady on poor demand for dollars from banks and corporates. "The supply of dollars was good, but there seemed to be few takers," a dealer with a state-run bank said. Marketmen said that there was negligible short sales of the dollar, a regular feature on Wednesdays. Banks usually sell dollars on Wednesdays and cover them back on Thursdays and Fridays to benefit from weekend swap differentials. "There was some demand for dollars in early trades from public-sector banks, notably the State Bank of India. However, adequate dollar supplies arrested any slide in the rupee," informed a dealer. At close, the rupee was seen at 43.3950/40. Cash/Spot was quoted at 0.625-0.75 paise, while both cash/tom and tom/spot ended at 0.25-0.375 paise. The RBI fixed its reference rate at Rs 43.40 to a dollar as against its previous Rs 43.41.
FORECAST: Rupee seen at 43.40 levels on Thursday.
Forward Premiums
Monthly premiums ended flat on Wednesday as activity remained dull in the forward segment. Stable call money rates a shade above 8 per cent aided the steadiness in premiums. Near forwards showed a marginal fall, while far forwards held their ground. The six-month annualised premium ended at 5 per cent as against the previous 5.01 per cent. "The premiums may not change much in the coming days as the call rates are steady, expecting good inflows from the cut in CRR," a dealer said. Premiums have declined ever after the Reserve Bank announced a 1 percentage point cash reserve ratio (CRR) cut in its busy-season credit policy. The first stage of the cash reserve ratio (CRR) cut due on November 6 will bring in Rs 4,561 crore. The monthly premiums (in paise) were 10-12 for November, 27-28 for December, 46-48 for January, 64-66 for February, 83-85 for March, 103-105 for April and 123-125 for May.
FORECAST: The six-month annualised forward premium seen at 4.95-5 per cent levels on Thursday.
Gilts
Bond prices remained steady for most part of Wednesday, but showed a slight upward movement towards the end on buying support from a few players.
"The market is flush with liquidity, but players are unwilling to take fresh positions as they are expecting an announcement of a bond auction to suck out the CRR-induced liquidity in the coming days," a dealer at a primary dealing firm said.
The 11.68 per cent 2006 was dealt at Rs 102.64 (102.63), 11.90 per cent 2007 at Rs 103.10 (103.05) and 12.32 per cent 2011 at Rs 103.73.
"Most expect an occassion coming through... that will decide the movement in prices. The sentiment in the market is slightly bullish. Most of the trades are in medium-term stock", a dealer with a British bank said.
FORECAST: Bond prices seen holding current levels on Thursday.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.