Call money
Call rates jumped up to 11-11.25% and held the level due to less liquidity on Wednesday. Opening at 10-10.25% from 9.75-10%, call rates moved up sharply to 11-11.25% on high demand for funds. "The call money market witnessed fairly high demand for funds, and lack of supplies pushed up rates steeply to 11-11.25%", a dealer said. Inflows in the ongoing fortnight (3-17 November) are just about Rs 4,000 crore, lower from the Rs 13,500 crore in the previous reporting cycle (20 October.-3 November). Recent auction-outflows, and the RBI's open market operations (OMO) are seen pushing call rates up. Further on Tuesday, the RBI mopped up Rs 4,281 crore when it put the 11.75% 2006; 11.90% 2007; and the 11.43% 2015 on its sale-window. At close, call rates were quoted at 11-11.25%. The RBI pumped in Rs 3,445 crore through its one-day reverse-repo auction at 10%. The NSE pegged its overnight Mibid and Mibor 10.27% (9.94%) and 10.47% (10.18%) respectively.FORECAST: Call rates seen shade over 11% on Thursday.
Spot dollar
The rupee weakned by six paise on high demand for dollars and less supply to meet the same on Wednesday. Opening the day at 46.67/68, higher from its previous close at 46.61/63, the rupee fell further to 46.72/73 level on heavy demand for dollars from corporates and state-run banks. "There was heavy demand for dollars, but less supply of dollars from exporters and other major players exerted pressure on the rupee", a dealer said. Towards close, supply of dollars from some state-run banks eased the pressure on the rupee and it strengthned by six paise to 46.67/68. The State Bank of India mop up of $5.25billion through its `India Millenium Deposit' is expected to have positive effect on the market sentiment. At close, the rupee was quoted at 46.68/69. The RBI pegged its reference rate against dollar at 46.69 (46.64). Cash/spot was quoted at 1.20/1.30 paise with both cash/tom and tom/spot 0.60/0.70 paise apiece.
FORECAST: Rupee seen holding current levels on Thursday.
Forward premiums
Forward premium moved up marginally due to tight liquidity in the call money market and a weaker rupee on Wednesday. The six-month annualised premium was quoted at 4.12% (4.14%) with one-year annualised premium at 4.33% (4.09%). " Premium quoted higher as the call money market witnessed heavy demand for funds and less supply. The rupee was also under pressure as there was demand for the dollars from some corporates and state-run banks. At mid-day, the rupee dipped to 46.72/73 levels, but gained by five paise by close of trades on dollar sales by some state-run banks", a dealer said. Call rates went up to 11-11.25% and maintained these levels till end of trades. Call rates may ranged between 10-10.50% in the coming days as some banks who did not venture in the market today may off-load there bunched up funds. November dollars were quoted at 11/12 paise while in far forwards April quoted at 91/93 with May at 106/108 paise.
FORECAST: Premiums will inch a shade in intra-day trades on Thursday.
Gilts
Bond prices continued its upward rally and quoted higher on Wednesday. The 11.40% 2008 was traded at Rs 101.54 (Rs 101.12) with 12.50% 2004 at 105.42 (Rs 105.45). Prices moved up by 15-20 paise despite pressure on the rupee and higher call rates. "The rupee came under pressure on heavy demand for the dollars and less suppliers to meet the demand. The rupee lowered to 46.72/73% at fore-noon trades, but inflow of dollars from some state-run banks eased the pressure on the rupee and came down to 46.68/69", a dealer said. Call rates also moved up steeply on lack of funds and touched 11-11.25% levels in intra-day trades. On the NSE's wholesale debt segment, trades worth Rs 2,084 were recorded. Deals worth Rs 585 crore were seen in 11.40% 2008 at a weighted average yield of 11.11% while those in the 11.30% 2010 amounted to Rs 335 crore.
FORECAST: Bond prices will quote in a flat to slightly higher band on Thursday.
(Complied by George Glace)
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.