Call MONEY
Call rates ended marginally higher on Wednesday. Opening the day at a steady 8-8.10 per cent unchanged from its last close, call rates firmed up due to outflows on account of Reserve Bank of India's (RBI) open market operations (OMO). "There was demand for funds, but supply was restricted due to the RBI's OMO," a dealer with a primary dealership said. The RBI had put the 12.29 per cent 2010 bond paper on its OMO window. At close, call quoted higher at 8.15-8.20 per cent. Marketmen expect liquidity to remain stable on account of inflows to the tune of over Rs 7,700 crore. Out of this, Rs 3,500 crore will flow in from the second phase of the cash reserve ratio (CRR) cut on November 20.
"With reporting Friday just round the corner, most players seem to have covered their positions... so there may not be any unusual demand," said a dealer with a state-run bank.
FORECAST: Call rates seen steady on Thursday due to ample liquidity.SPOT DOLLAR
The rupee ended firmer by two paise against the dollar on Wednesday. Opening at 43.41/42 from its last close at 43.41/42, the rupee held a narrow range, despite dollar demand from a few state-run banks, who were reportedly bidding on behalf of large oil firms. "Dollar sales by a few big corporates and foreign banks out-stripped enabled the rupee to close stronger," a dealer said. At close, the rupee was seen at 43.39/40. "There was also some amount of dollar-selling by banks... but corporate flows were the dominant factor today," a dealer with a private-sector bank said. Cash/spot ended at 0.50/0.75 paise, while both cash/tom and tom/spot closed at 0.25/0.375 paise. The RBI fixed the reference rate at Rs 43.40 per dollar as against Rs 43.38 of the previous session. The rupee ended at 70.61 per pound sterling and 45.20 to a euro.
FORECAST: Rupee seen at 43.40 levels on Thursday.
FORWARD PREMIUMS
Forward premiums ended marginally lower on Wednesday. The six-month annualised premium closed at 4.79 per cent (4.81 per cent). "Receiving by exporters and some corporates neutralised the impact of firm call rates on Wednesday. The forwards closely tracked spot rupee and eased a bit," a dealer with a private bank said. Monthly premiums (in paise) were 4/5 for November, 19/20 for December, 39/41 for January, 54/56 for February, 71/72 for March, 91/93 for April, 110/111 for May, 127/ 129 for June, 147/149 for July, 167/169 for August, 187/189 for September and 206-208 for October. "Strong foreign institutional investor (FII) inflows has improved dollar supplies", a dealer with a brokerage said. FII's have invested a cumulative amount of nearly $200 million in November till date. "The bias is towards softer premiums. There is also little by way of external factors to take forwards higher", a dealer with a European bank said.
FORECAST: Forward premiums seen at the same levels on Thursday.
GILTS
Bond prices received a boost after the Reserve Bank closed its open market sale window for the 12.29 per cent 2010 paper on Wednesday. In afternoon trades, the 12.40 per cent 2013 bond was quoted at 104.64-104.67 as compared to the previous day's Rs 104.61. The security fell in the morning to Rs 104.55/57. The 12.32 per cent 2011 security rose to Rs 104.42 (104.35).Dealers said that the security prices rallied on news that the Reserve Bank of India had mopped-up the required amount. "Bond prices eased in the morning as the market remained uncertain on the duration that the RBI will keep the window open. However, the ending of the open market sale made the market sure that the liquidity levels were intact in the system and scope existed for deploying extra funds in gilts," a dealer with a primary dealership said.
FORECAST: Bond prices seen at moderately higher levels on Thursday.
(Compiled by Anurag Joshi)
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.