MARKET ROUND-UP

Call Money
Call rates ruled range-bound on Wednesday. Opening the day steady at 7.00-7.15%, call rates remained soft amidst comfortable liquidity as the inter-bank market flushed with funds from larger players. “Comfortable conditions prevailed despite heavy demand to cover reserve needs in the early part of the reporting cycle and the Reserve Bank of India’s (RBI) open market operations (OMO)”, a dealer said adding that pent-up demand for funds after Tuesday’s bank holiday exerted mild pressure on funds. Most of the transactions were done in the range between 7.05% and 7.15% levels. At closed, call rates were seen at 7.10-7.20%, a shade high from Monday’s closing levels of 6.90-7.00%. The RBI mopped up Rs 6,000 crore at its one-day repos-auction at 6.50%. Meanwhile, the National Stock Exchange (NSE) pegged its overnight Mibid and Mibor at 7.02% and 7.16% respectively.
FORECAST: Call rates seen easing on Thursday.

Spot Dollar
The rupee gained by four paise on Wednesday. Opening at 46.99/47.01, from its Monday’s close of 47.01/02, the rupee moving up to its intra-day high of 46.96/97 due to dollar sales by exporters and unwinding of long positions by banks.

“Two day’s dollar supplies accumulated over Tuesday’s bank holiday gave the rupee good underlying support. Moreover, dollar demand from corporates and importers was negligible”, a dealer said.

The forex market was closed on Tuesday on account of “Id-E-Milad”. At close, the rupee was seen at 46.97/98, up by four paise from Monday’s finish.

Market participnats expect the rupee to remain stable in the next two days owing to steady dollar inflows from exporters and lack of adequate demand.

Meanwhile, the RBI fixed its reference rate for dollar at 47.00, as against its previous fix of 47.02.
FORECAST: The rupee seen holding steady on Thursday.

Forward Premiums
Forward premiums remained more or less steady on Wednesday. The six-month and one-year annualised premia closed at 5.09% and 5.06% levels respectively. The futures market was generally quiet, but late paying pressure pushed up the premiums, particularly at the longer end. The rupee, however, close four paise high from its Monday’s closing levels. The benchmark six-months forward dollar premiums payable at end-November closed at 115/117 paise, unchanged from previous levels.The 12-month forward dollar premiums to be payable at May 2002 closed at 232.5/234 paise, mildly higher from Monday’s closing levels of 231/233. Cash/tom premium closed at 0.40/0.55 paise while cash/spot premium closed 0.85/1.00 paise. Otherwise, June dollar closed at 12.75/31.75 paise, while in the far forwards, December dollar clsoed at 134/136 paise, with May ’02 dollar at 231/233 paise
FORECAST: Forward premiums seen easing on Thursday.

Gilts
Gilts prices gained by around 50/60 paise on Wednesday. The 11.50% 2011A paper gained by 67 paise and was seen at Rs 110.72 while the 11.40% 2008 was seen at Rs 109.78, up by 43 paise from its last close. Volatility was seen in prices of government bonds, particularly at the medium and longer-end witnessing considerable gains. Bond prices opened lower and moved erratically both ways. However, showing a steep rise on hectic buying, but late profit-selling pared part of the early gains”, a dealer said. The RBI accepted the only bid for 6,000 crore at its one-day repo auction at the cut-off rate of 6.50% levels. On the NSE’s wholesale debt segment, trade worth Rs 3,258.50 crore were seen. Trades worth Rs 710 crore was seen at the 11.50% 2011A paper, while those in the 11.40% 2008 and the 11.30% 2010 were amounted to Rs 295 crore and Rs 205 crore respectively.
FORECAST: Gilt prices seen gaining a shade on Thursday.

(Compiled by Atmadip Ray)