Call money
Call rates were a shade up by close of trades on Tuesday at 8.10%. Opening the day at 8% from its last close at 9.50-9.75%, call rates were seen in the 8-8.10% band throughout the day. "Call rates were softer because of the bank rate and cash reserve ratio (CRR) cut announced on Friday", a dealer said, pointing to the fact that banks will now cheaper refinance at a lower bank rate. Further the first stage of the CRR - 25 basis points - effective from the fortnight starting 24 February will release Rs 2,050 crore. Further, the central bank also cut the repos-rate by 50 basis points to 7.5% today. At its two-day repos auction held today, the RBI accepted a single bid for 6,000 crore at 7.5%. The RBI received no bids at the reverse-repos. The last repos-rate cut was executed on October 25 - to eight per cent from 8.25%. Meanwhile, the NSE pegged its overnight Mibid and Mibor rates at 7.94 % and 8.13 % respectively.FORECAST: Call rates seen at 7.50-8% levels on Thursday.
Spot dollar
The rupee gained against the dollar on Tuesday. Opening the day at 46.55/57, stronger from it's close at 46.61/62 on Friday, the rupee went lower to 46.61/61 where it finished. "The rupee fell against the dollar due to renewed corporate demand for the dollar. Demand for dollars was higher after a long weekend followed by a holiday on Monday", a dealer said. There was fresh buying interest from importers and coporates after the RBI slashed the bank rate by 50 basis points and introduced a two phase reduction in the CRR. "There was good demand from importers and state-run banks particularly the SBI in the face of poor dollar inflows from exporters and foreign banks", a dealer said. The increased tension at the internationl level following US-British airstrikes on Iraqi targets, and the illegal entry of Pakistani military planes into Indian airspace weakened the forex market, with major importers rushing for their import covering.
FORECAST: Rupee seen at 46.50/61 levesl on Thursday.
Forward premiums
ÎForward premiums softened further as a result of the interest rate cut last week. The six-month and one-year annualised forward premium closed sharply lower at 4.16 per cent and 4.23 per cent respectively compared to 4.40 per cent and 4.45% respectively on Friday. "Call rates were steady, and this aided softer premiums after the bank rate and CRR cuts last Friday", a dealer said. Cash/spot and cash/tom finished lower at 1.10/1.20 and 0.70/0.80 paise. February dollars quoted at 1/2 paise, March 16/17 paise, April 33/34 paise, May 48/50 paise, June 65/67 paise, and July 82/84 paise. Forwards are seen dipping from the the start of the next fortnight when the first stage of the CRR - 25 basis points - releases Rs 2,050 crore. Dealers also attributed foreign institutional investors sales on local bourses on Monday for resulting into a heavy demand for dollars.
FORECAST: Premiums seen softening on Thursday.
Gilts
The bond market saw improved sentiment on Tuesday as a followup of the CRR and the bank rate cut last week. Further the first stage of the CRR - 25 basis points - effective from the fortnight starting 24 February will release Rs 2,050 crore. The central bank also cut the repos-rate by 50 basis points to 7.5 per cent today. Tuesday was a good day in volumes as well as in trades. There was interest in some specific segments namely the short term market which saw more takers also. The benchmark 11.30 per cent 2010 paper was hovering at Rs 107.25 with volumes in the region of Rs 455 crore. The 11.40 per cent 2008 paper was seen at Rs 107.87 and saw volumes of Rs 360 crore. The 11.03 per cent 2012 paper was quoted at around Rs 104.88 and saw trades worth Rs 275 crore. The overall trade on the NSE was Rs 3,500 crore.
FORECAST: Bond market seen bullish on Thursday.
(Compiled by Ujjal K Basu Roy)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
