CALL MONEY
Call money rates ended firm above the seven per cent refinance level on Thursday amid steady demand for funds to cover outflows towards the 10-year bond auction and meeting residual reserve requirements ahead of the reporting day. The overnight interest rates opened at 7.05-7.15% as compared to 6.9-7 per cent on Wednesday. "Demand was steady throughout the day which kept rates firm. Apart from covering the outflows towards the bond auction, there was demand from banks to meet reserve requirements ahead of reporting Friday," a primary dealer said. The call rates ended at 7-7.15%. The RBI auctioned the 12.25 per cent 2010 bond for Rs 6,000 crore on Wednesday at a cut-off yield of 10.52%, which was higher than market expectations of 10.47-10.48%. Payments worth Rs 5,485 crore towards the bond issue were made on Thursday. Dealers said unavailed refinance cushioned a sharp spike in call money rates on Thursday.
FORECAST: Call rates seen lower on Friday.SPOT DOLLAR
The rupee ended slightly firmer on Thursday on strong dollar inflows. The rupee opened at 43.6475/6550 as against Wednesday's close of 43.645/65. A couple of large foreign banks sold dollars, dealers said. "A lot of banks had gone long around the 43.65 per dollar level and were booking profits," a dealer with a private bank said. Dollar bids from state-run banks checked the rupee's gains beyond 43.64, he said. The rupee ended at 43.6350/64 per dollar. "Trading remained range-bound. Some state-run banks were selling dollars on behalf of their exporter clients," a foreign bank dealer said. Cash/spot and tom/spot ended at 0.50/0.75 paise, with cash/tom closing at 0.125/0.25 paise. "There was good selling at the 43.64 level," a dealer with a forex brokerage said. The RBI maintained its reference rate at 43.65 on Thursday.
FORECAST: The rupee seen steady on Friday.
FORWARD PREMIUMS
Forward premiums were volatile, swinging from highs in early trade on a lot of paying interest to closing lows. The six-month forward premium ended Thursday at an annualised 2.63% compared with the previous close at 2.69%. "In the morning almost every bank was paying after the rise in yields at the auction. When the bids disappeared and there was no follow-through corporate interest, the receiving started," the head of treasury at a private bank said. The RBI set a yield of 10.52% at a 10-year bond auction on Wednesday."There is a view emerging that with stock markets bearish, there will not be another auction until May-end. The easy liquidity is prompting banks to receive," a dealer said. Receivers emerged after call rates ended soft despite outflows of Rs 6,000 crore towards the bond and T-bill auctions, dealers said. May dollars ended at 5/6 paise, June at 12/13 paise, while in the far end November closed at 65/66 paise and December at 77/78 paise.
FORECAST: Premiums seen range-bound on Friday.
GILTS
Bond prices ended higher on Thursday amid fresh purchases at lower levels by traders. Dealers said profit-booking on Friday could cap further gains. The newly auctioned 12.25 per cent 2010 bond, re-issued on Wednesday, was traded at Rs 110.75, up 15 paise over the morning levels. The central bank on Wednesday set a cut-off price of Rs 110.60 at the auction. The 11.99 per cent 2009 bond ended Rs 109.30 compared to early morning levels of Rs 108.90. The bond ended Wednesday at Rs 108.80. "Traders bought the new 10-year bond in a big way in the evening. Prices moved up and are expected to stablise around these levels," a primary dealer said. "The buying in the evening was more to align the new bond to the yield curve. The curve has become steep as short term yields have fallen while long term rates have risen in the past three weeks," a dealer in a private sector bank said.
FORECAST: Bond prices seen range-bound on Friday.
-- Compiled by Anurag Joshi
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