Call MONEY
Call money rates ended steady as liquidity remained adequate to handle the normal demand for funds on Tuesday. Opening the day at 8-8.10 per cent, the call rates showed almost no change and ended at 8-8.05 per cent as compared to 8-8.10 per cent on Monday. Dealers said that the Rs 4,561 crore inflow in the system on account of the effective CRR cut and removal of incremental CRR on FCNR (B) liabilities of banks on November 6 has infused more funds into the market. However, the demand has been moderate and even the Rs 3,500 crore outflow due to the bond auction last Thursday have not impacted the rates. Dealers expect the call rates to fall further on Saturday when the second tranche of the CRR cut enters the system. The second phase of CRR cut will lead to an inflow of Rs 3,500 crore into the system.
FORECAST: Call rates seen at 8-8.10 per cent levels on Wednesday.SPOT DOLLAR
The rupee ended weaker against the greenback on last-minute demand and squaring-up of short-dollar positions by banks on Tuesday. The rupee opened at 43.38/39 and remained steady in the pre mid-session trades. The Indian unit ended three paise weaker at 43.41/42 per dollar as compared to Monday's close of 43.38/3850. "The State Bank of India (SBI) entered the market in late afternoon and bought dollars on behalf of a large oil company," said a dealer with a state-run bank. Banks were squaring short-positions on the dollar, dealers added. Cash/spot ended at 0.25-0.375 paise, while cash/tom and tom/spot ended at 0.25-0.375 paise. Meanwhile, the RBI fixed the reference rate at Rs 43.38 per dollar as against Rs 43.39 on Monday. The rupee ended at 70.41 per pound sterling and 44.88 per euro.
FORECAST: Rupee is expected to move in a thin range on Wednesday, but may fall below 43.40 if fresh dollar supplies enters the system.
FORWARD PREMIUMS
Monthly premiums eased on fresh receivings by banks on Tuesday. Dealers said that several corporates were receiving premiums (buy-sell swaps) in the forward market. The six-month annualised premium ended higher at 4.82 per cent compared with 4.88 per cent in the last session. The forward premiums were 4.50/5.50 paise for November, 19/20 paise for December, 40/41 paise for January, 55/56 paise for February, 73/74 paise for March, 92/93 paise for April, 111/112 paise for May and 129/131 paise for June. "On the whole premiums were stable", said a dealer adding that softer call rates at 8-8.10 per cent aided the easing of premiums. Premiums are expected to fall further in the coming days as the second tranche of the cash resreve ratio (CRR) cut will release Rs 3,500 crore into the system.
FORECAST: Forward premiums seen a shade lower on Wednesday.
GILTS
Bond prices firmed by 10-12 paise on Tuesday. Buying interest continued to be limited to long-dated securities, which were bought by players at yesterday's higher levels. Marketmen expect a further rise in prices of securities as liquidity is expected to be enhanced by an infusion of Rs 3,500 crore into the system on account of the second phase of the CRR cut this Saturday. The 11.83 per cent 2014 security ended 11 paise higher at Rs 100.55 (Rs 100.44). Other actively traded securities were the 12.40 per cent 2013, dealt at Rs 104.50 (104.35) and 12.32 per cent 2011 at Rs 104.35 (104.27). "Some stray deals did take place on the short-end, but the action was basically in long-dated gilts," said a dealer with a primary dealership. "Soft call rates and ample liquidity in the system has provided dealers an opportunity to deploy excess funds in bonds," said a dealer with a private bank.
FORECAST: Bond prices seen at higher levels on Wednesday.
(Compiled by Anurag Joshi)
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.