Call rates ease to 7.5%, Re ends stronger

Mumbai, Jan 31 | Updated: Feb 1 2006, 05:30am hrs
Government bonds on Tuesday rallied further on renewed buying on dips in mostly thin trade ahead of the US Federal Open Market Commission (FOMC) meeting even as call rates eased to below 7.5% on improved liquidity comfort amid sustained infusion of funds through the repo window.

Key securities across the board rose by another 15-50 paise on persistent bargain purchases ahead of the FOMC meeting later on Tuesday, expected to hike rates by 25 basis points, dealers said.

Business activity, however, was quiet and volumes shallow, they added. Alan Greenspan would be presiding at his last meeting of the FOMC and most operators were cautious about the tone of his speech regarding the pace of further interest rate hikes.

There was no major activity. Moreover, the market has factored in a 25 basis point hike, a treasury dealer said.

Market-friendly 10.25% (2021) paper surged by over 55 paise to Rs 125.15/25 with the yield tumbling by 8 basis points to 7.46% and the actively traded 8.07% (2017) bond shot up by 30 paise to Rs 105.17/20 with the yield sliding by 5 basis points to 7.37%.

Benchmark 7.38% (2015) stock remained untraded but was quoted sharply higher at Rs 100.75 (yield 7.28%) and the 7.37% (2014) bond gained over 25 paise at Rs 101.10/20 (yield 7.18%).

Call rates ended at 7.25-7.40%, lower from Monday's finish of 7.50% after opening firm around 7.00-7.50% and hitting the day's peak of 7.75% in early trade. Most of the business, however, was transacted between7.25-7.50%, dealers said.

RBI infused a whopping Rs 8,920 crore through the 1-day fixed rate repo auction in the morning at 6.50% and another Rs 2,710 crore in the afternoon, under the liquidity adjustment facility (LAF).

The apex bank did not receive any bids for the morning one day reverse repo auction but accepted six applications for a sum of Rs 2,925 crore in the afternoon auction at 5.50%, under the LAF, indicating improved liquidity.

The dollar ended slightly cheaper against the rupee at Rs 44.11/12 per dollar but the pound sterling turned dearer at Rs 78.18/21 per pound at the close of the inter bank foreign exchange (Forex) market here on Tuesday.