Spot dollar
The rupee held rocksteady against the dollar on Monday. Opening the day at 46.7575/7650, the rupee gained a shade in intra-day trades to close at 46.7300/7350. "Till afternoon, moderate dollar demand was met by matching supply... in late afternoon trades, a state-run telecom firm reportedly resorted to moderate dollar sales. The rupee gained a shade on fresh dollar inflows and absence of follow-up demand", a dealer said. The country's forex reserves hit a record peak of $39.476 billion on December 1. "The marginal appreciation of the rupee was due to poor import demand and relatively higher supply... major market players were inactive ahead of the christmas and year-end holidays", a dealer said. Banks have enjoyed dollar-liquidity, thanks to the SBI 's $5.5 billion `India Millennium Deposit' (IMD) inflow. The RBI pegged its reference rate for the dollar 46.76 as its last peg at 46.77.
FORECAST: Rupee seen at 46.7450/7550 levels on Tuesday; seen gaining a shade.

Forward premiums
Forward premiums held steady on Monday. The sixth-month and one-year annualised forward premia closed marginally higher at 3.79% and 3.98%. "Forward premiums moved in a narrow range and ended nearly steady on the back of a steady spot-rupee", a dealer said. "The rise in reserves, a comfortable liquidity situation, reduced bond issue frequency and softening in international crude oil prices have been the main factors behind the recent improved market sentiment, JP Morgan said in its report dated 16 December. The country's forex reserves hit a record peak of $39.476 billion on December 1. December dollar quoted at 2.5/3.5 paise, January 17/18 paise, February 30/31 paise while in the far terms, April closed at 61/62 paise with May at 77/79 paise. "The forthcoming Christmas holiday mood has also added to lacklustre dealing in forex market", a leading forex broker said. Premiums have quoted softer after the SBI's $5.5 billion IMD inflow.
FORECAST: Forward premiums will quote steady on Tuesday.

Gilts
Bond prices were volatile on Monday. Long-term dated stock prices rose by 40-50 paise. The 11.03% 2012 was seen at Rs 99.32 with the 11.40% 2008 at Rs 103.18 levels. "Market sentiment is still buoyant... the benchmark 10-year government bond yield has declined by around 60 basis points in the past three months to 11%", J P Morgan said in a report dated 16 December. J P Morgan also said that it projected a 50 basis point reduction in the bank rate to 7.5% early in the first quarter of the next fiscal year. Call rates quoted between 8.50-8.75% levels after opening the day at 8.50-8.60%. "The market was comfortable despite the heavy demand to cover reserve needs at the start of the new reporting cycle as many feared that call rates would tighten on advance tax outflows", a dealer with a primary dealership said. On the NSE's wholesale debt segment, trades worth Rs 2,980.91 crore were seen.
FORECAST: Bond prices seen gaining a shade dip on Tuesday.

(Compiled by Raghu Mohan)