Call Money
Call rates rose on Tuesday on the back of strong demand and restricted supplies from a large lender. A large state-run bank, usually a large lender in the call market was said to have hiked their rate and lent limited quantities to capitalise on the strong demand. Demand continued to be strong as there are lesser number of days to borrow in the current reporting fortnight due to the holiday last Friday. Banks report their net reserves every fortnight. Foreign banks were the main borrowers while state-run banks were the main lenders. Call closed at 8.00-8.10 per cent after reaching an intra-day high of 8.25 per cent. However, no sharp rise in the call rates are accepted as liquidity in the banking system is expected to remain comfortable. Elsewhere, the National Stock Exchange (NSE) pegged its overnight Mibid and Mibor at 7.59% and 7.85% respectively.
FORECAST: Call rates seen range-bound Wednesday.

Spot Dollar
The rupee appreciated by around 3-4 paise on the back large corporate dollar supplies. HDFC was believed to have sold around 80-100 million dollars. Also banks offloaded the long positions taken ahead of the long weekend. A few foreign banks sold weekend dollars which was in turn mopped up by state-run banks. PSU banks usually act as proxies for the RBI. The rupee traded in band and the comparatively thin demand was met enough supplies. Overall the rupee traded in a tight range for most of Tuesday. Dollar demand from a few banks at regular intervals helped keep the rupee range-bound. The rupee touched low at 47.9900 and at high of 47.9500 . The rupee opened at 47.9800/9850 and closed at 47.9600/9700 per dollar. Meanwhile, the RBI fixed its reference rate for the dollar at 47.98 as against its previous fix 47.98. In cross-currency trades, the euro closed at 43.43, while the pound-sterling closed at 69.80.
FORECAST: The rupee seen firm Wednesday.

Forward Premiums
Forward dollar premium rose slightly in the longer tenor on the back of slightly firm call rates. However, appreciation in the rupee curb any sharp rise in the premiums. The rupee had appreciated by around 3-4 paise in intra-day trades Tuesday. However, paying interest put some pressure on the longer tenor premiums. Overall, forward premia moved in a tight range. Call rates firmed on the back of slightly tight supplies and strong demand ahead of Reporting Friday. Trade was relatively modest in the spot rupee market. The benchmark six-month annualised premium closed at 5.96% while the annualised one-year premium closed at 5.85%. In month-wise premiums, November dollar traded at 22/23 paise, while in the far forwards, January dollar traded at 72/74 paise with October dollar at 276/278 paise.
FORECAST: Forward premiums seen slightly firm Wednesday.

Gilts
Gilt rose sharply on the back of comfortable market sentiment on liquidity. Appreciation in the spot rupee also helped in the keeping the market sentiment upbeat. Strong demand was seen in the 9.85%, 2015 which saw trades worth 940 crore on Tuesday. Light profit taking was seen in early trade owing to a firm call rate. “The market may have be correcting itself after the sharp rise seen post-rate cuts,” a dealer said. Gilt prices are expected to continue to rally over the next few days with periodic corrections. The 9.85%, 2015 security opened at Rs 104.05 and gained to Rs 104.60 in late trade. On the National Stock Exchange NSE’s wholesale debt segment, trades worth around Rs 5,723 crore were seen. Trades worth Rs 653 crore were seen in 11.03% 2012 paper while 11.50% 2011A paper saw trades worth Rs 640 crore.
FORECAST: Prices seen firm Wednesday.

— Compiled by Srikesh P Menon