Call Money
Call rates continued to rule easy on Tuesday. Demand was moderate and steady supplies from the usual lenders kept call rates easy. Ample liquidity in the banking system was said to be the primary reason for call rates to remain ease. Demand was relatively strong in early trade but thinned towards the end of trades. The current two-week long reporting period began on November 17. 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 4,805 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 6.40-6-50%. Elsewhere, the NSE pegged its overnight Mibid and Mibor at 6.54% and 6.66% respectively.
FORECAST: Call rates seen easy Wednesday.

Spot Dollar
The rupee appreciated against the US dollar on Tuesday owing to steady supplies from banks and corporates. Periodic demand however helped the rupee from appreciating sharply. On the other hand, steady dollar supplies from corporates with moderate demand helped the rupee to gain ground to an intra-day high of 47.9650 per dollar. Dollar supplies were steady however, persistent buying of dollars by state-run banks kept the rupee in control. The rupee opened barely changed against the dollar in tight range-bound trade. The rupee opened at 47.9850/47.9900 per dollar. The rupee closed at 47.9700/9750 per dollar. The rupee is expected to remain range-bound for the rest of the week. Meanwhile, the RBI fixed its reference rate for the dollar at 47.98 as against its previous fix 48.02. In cross-currency trades, the euro closed at 42.23, while the pound-sterling closed at 67.63.
FORECAST: The rupee seen range-bound Wednesday.

Forward Premiums
Forward dollar premium continued to trade easy on the back of easy call and firm rupee. The rupee appreciated on Tuesday owing to moderate demand from state-run banks and steady supplies from corporates and banks. The annualised six-month and one-year forward premia closed at 6.15% and 5.90% respectively. Overall, forward premiums remained relatively easy. Call rates have been 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, December dollar traded at 20/21 paise, while in the far forwards, April dollar traded at 122/124 paise with November dollar at 276/278 paise.
FORECAST: Forward premiums seen range-bound Wednesday.

Gilts
Government securities prices continued to rally owing to strong demand on Tuesday. Profit-selling in early trade brought down bond prices briefly. Absence of any auction announcement has perked up the market sentiment, dealers said. The profit-selling seen was just a consolidation phase, dealers said. A relatively stable rupee as well as easy call rates helped the bond prices rally. 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 NSE’s wholesale debt market saw a trading volume of Rs 6,281 crore. Trades worth Rs 3,351 crore were seen at the 9.85% 2015 paper, where the 11.03% 2012 and 11.50% 2011A papers amounted to Rs 740 crore and Rs 400 crore respectively.
FORECAST: Prices seen firm Wednesday.

— Compiled by Srikesh P Menon