Call money
Call rates held steady on Wednesday. Opening the day at 9.80-9.90%, from its previous close of 9.75%, call rates further inched up to its intra-day high at 10.05% as liquidity was under pressure due to the outflow of Rs 1,568 crore on account of Tuesday's state government stocks auction. The market continued to witness liquidity crunch also due to outflows on state government loans coupled with absence of any significant inflows. Lending banks were quoted higher rates in call money market, and preferred to perk funds in gilt market which is more profitable. However, call rates eased later as the central bank continued its liquidity support through its reverse-repo route. At close, call rates seen at 9.75%, unchanged from its previous day's close. The RBI accepted four bids for Rs 735 crore in its reverse-repo auction at the cut-off rate of 10%, while it did not receive any application for its repos-auction.FORECAST: Call rates seen remaining stable on Thursday.
Spot dollar
The rupee gained against the dollar on Wednesday. Opening at 46.39/40, from its last close of 46.42/43, the rupee gained on sustained dollar inflows from foreign funds and exporters. "There were good dollar inflows mainly from foreign funds, who are net buyers in the capital market. Despite month-end, corporate dollar-demand remained very thin, as importers preferred to wait as the rupee is maintaining its strong position", a dealer said. Market players also discounted the earthquake and its economic impact as huge quake-aids are expected from World Bank and other institutions, which in turn boost the dollar supply. Meanwhile, the RBI fixed its reference rate for dollar at 46.41 as against its previous fix of 46.47. In cross-currency trades, rupee fell sharply against the euro by 61 paise to 43.17 (42.56), while rupee quoted 28 paise lower against the pound- sterling to 67.86 (67.58).
FORECAST: Rupee seen appreciating marginally on Thursday.
Forward premiums
Forward premiums went up marginally on Wednesday. Forward premiums tracked the call rates and moved up on paying pressure, despite the strong spot rupee. Call rate remained steady and closed at 9.75%, while rupee continued to become stronger as there was good dollar inflows form the foreign funds. The six-month and one-year annualised premia closed higher at 4.86% and 4.73% respectively as compared to 4.72% and 4.67% of the previous day. Cash/spot and cash/tom premiums ended at 1.15/1.20 paise and 0.60/0.65 paise respectively. "Market sentiment was boosted up by the possibility of a cut in the Fed rate", a dealer with a forex dealership said. In month-wise premiums, February dollar traded at 16.5/17.5 paise while in far forwards, June dollar traded at 91/92 paise with July dollar at 110/112 paise. FORECAST : Forward premiums seen steady on Thursday.
Gilts
Bond prices continued to move upwards on Wednesday. "Gilt prices extended yesterday's rally as there is a possible cut in the Fed rate by at least 50 basis points", a dealer said. Prices rose by 20-25 paise from Tuesday's levels. The 11.30% 2010 paper was seen at Rs 105.20 while the 11.03% 2012 and 11.40% 2008 were pegged at Rs 103.15 and Rs 106.20 respectively. Call rates remained stable and ruled in a narrow range between 9.75% and 10.10% levels. The RBI accepted four bids for Rs 735 crore in its reverse-repo auction at 10%. However the RBI did not receive any application for its repos-auction. On NSE's wholesale debt segment, trades worth Rs 2,729.27 crore were seen. Trades worth Rs 520 crore were seen at 11.30% 2010 paper, while those in the 11.03% 2012 and 11.40% 2008 traded at Rs 345.44 crore and 330 crore respectively.
FORECAST: Bond prices seen gaining on Thursday.
(Compiled by Atmadip Ray)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
