Call Money
Call rates remained relatively range-bound through out Monday despite the Rs 4,000 crore auction 9.85%, 2015 scheduled for later in the day. Ample liquidity in the banking system was said to be the primary reason for call rates to remain ease. Demand was strong being the start of the new-reporting period. The current two-week long reporting period began on Saturday. The underlying sentiment on liquidity in the banking system has been comfortable which has helped keep the call rates in control. Foreign banks were the main borrowers while state-run banks were the main lenders. The Rs 6.750 crore drain via RBI repo also did not have much impact on the call rates. Banks took advantage of the ample supplies and comparatively low rates to meet with their needs. Call rates opened at 6.60-6.70% and closed at 6.50-6.60%. Elsewhere, the NSE pegged its overnight Mibid and Mibor at 6.20% and 6.10% respectively.
FORECAST: Call rates seen easy Tuesday.

Spot Dollar
The rupee strengthened on Monday on the back of good weekend supplies. Steady dollar supplies from the long Diwali weekend helped the rupee appreciate. Wednesday and Friday were bank holidays for the Diwali festival. Light corporate demand early Monday was comfortably met. State-run banks bought dollars aggressively through out the day. Dollar supplies were steady however, persistent buying of dollars by state-run banks kept the rupee in control. Trade was relatively active, with excess dollar supplies being absorbed by state-run banks. The rupee opened at 47.9600/47.9650 per dollar. The rupee closed at 47.9450/0500 per dollar. The rupee touched an intra-day low of 47.9700 per dollar and an intra-day high of 47.9400 per dollar. Meanwhile, the RBI fixed its reference rate for the dollar at 47.97 as against its previous fix 48.02. In cross-currency trades, the euro closed at 42.19, while the pound-sterling closed at 68.17.
FORECAST: The rupee seen firm Tuesday.

Forward Premiums
Forward dollar premium eased slightly in the near end on the back of easy call rates. The rupee strengthened on the back of strong weekend supplies accumulated over the long Diwali weekend while demand was relatively thin. The annualised six-month and one-year forward premia closed at 6.20% and 6.10% respectively. Overall, forward premiums remained relatively easy. Call remained easy owing to ample liquidity in the banking system on inflows of Rs 6,000 crore after the the first tranche of the CRR cut took effect from November 3. Long-tenor premiums are seen range-bound owing to easy call rates. Also, US interest are expected to reverse its low trend in the near-future reducing the interest rate differential between US and India, this will help premiums ease further. In month-wise premiums, November dollar traded at 5/5.5 paise, while in the far forwards, April dollar traded at 133/134 paise with October dollar at 272/273 paise.
FORECAST: Forward premiums seen range-bound Tuesday.

Gilts
Govt securities prices rose on the back of strong demand. Demand was strong despite the 9.85%, 2015 auction later in the day, owing to the prevailing ample liquidity in the banking system. Trade was comparatively active amid light profit selling in intra-day trades. Liquidity in the banking system got a boost from the Rs 6,000 crore inflows after the first part of the CRR cut took effect on Nov 3. Dealers said the underlying sentiment on liquidity was always bullish, now with this CRR cut inflows, liquidity has been boosted and market players feel the RBI may take some step to suck out excess liquidity. The National Stock Exchange’s (NSE’s )wholesale debt market saw a trading volume of Rs 4,364 crore. Trades worth Rs 600 crore were seen at the 9.85% 2015 paper, where the 11.03% 2012 and 11.50% 2011A papers amounted to Rs 550 crore and Rs 530 crore respectively.
FORECAST: Prices seen firm Tuesday.

— Compiled by Srikesh P Menon