Market Round-Up

Updated: Aug 31 2004, 05:30am hrs
Call Money
Call rates ended lower at 4.00-4.25 % at the overnight call money market amidst ample liquidity and thin demand. Call rates opened around 4.25-4.50 %. The announcement of the upcoming auction between September 2-9 for Rs 10,000 crore is likely to be the next trigger to drive further action in the bond market. RBI mopped up Rs 30,720 crore at the one-day fixed rate repo and Rs 5,275 crore at the seven day fixed rate repo auction at 4.50 %, indicating a surfeit of liquidity in the system. Traders said they were turning their attention to whether the central bank would borrow funds through the issue of floating rate bonds. According to the borrowings calendar, the government is set to tap the market with two bonds one maturing in five to nine years and raising Rs 6,000 crore and another of 15 to 19 years maturity for Rs 4,000 crore between Sept 2 and 9. Traders hope one of the two will be a floating rate bond.
FORECAST: Call rates seen stable on Tuesday

Spot Dollar
The rupee on Monday ended weak against the dollar as some foreign banks accumulated dollars to meet demand from foreign funds, dealers said. The rupee was at Rs 46.3600 per $1, down from Rs 46.3100 per $1 on Friday. Dealers said some importers also bought dollars to meet month-end payments. There was good demand from custodial banks, a dealer at a private bank said. There seems to be good foreign fund outflows. And even the weekend supplies were easily absorbed by the demand. Month-end demand was on cash basis, but we did not see much of an oil demand. There were some cancellations but it was very small, said the dealers. Also, some banks that had sold on Friday bought back dollars today because of the dollars gains (overseas). On Friday and Monday, the dollar had gained against leading currencies drawing strength from stronger US economic data, released last week.
FORECAST-Rupee fluctuation seen range bound on Tuesday

Forward Premiums
The benchmark 1-year forward dollar/rupee premium ended at 2.05% annualised, a tad lower from 2.08% on Friday. The six month forward annualised premium was available at 2.36. In early trade, a US bank bought forward dollars in the near month forwards, mainly for November maturity, dealers said. But premiums did not move up significantly because some state-owned banks sold forward dollars, dealers said. Movement in forwards will be significant only when the spot rupee breaks the Rs 46.30-46.50 per $1 band, dealers said. The rupee is expected to rise as month-end demand from importers fades after Monday. Corporate demand, mainly from oil companies, is likely for meeting daily needs. A further rise in the greenback overseas may prompt some banks to buy dollars. Dollar supplies from exporters and state-owned banks should support the rupee at below Rs 46.40 against the dollar, said dealers.
FORECAST:The forward seen stable on Tuesday

Gilts
Despite positive sentiments due to contained inflation, a slide in global oil prices and receding fears of a hike in interest rates, government bonds succumbed to profit-selling and ended with moderate declines across the spectrum. Key gilts across the board fell by 20-80 paise on a new round of profit-selling in the absence of follow-up buying support after the recent smart rally, dealers said. Benchmark, 10-year 7.37 % 2014 stock dropped by 60 paise to close at Rs 108.90/95 with the yield rising by seven bps to 6.12 per cent. 7.38 % , 2015 gilt dipped 55 paise to Rs 109.05/10, the 7.46 %, 2017 bond lost 65 paise at Rs 106.10/20 and the actively traded 8.07 %, 2017 paper tumbled by 75 paise to Rs 112.05/15. The 6.85 %, 2012 stock fell by 20 paise to Rs 103.20/30, 7.40 %, 2012 bond plunged by 55 paise to Rs 106.85/90 and the 7.27 %, 2013 paper nose-dived by 80 paise to Rs 106.00/10.
FORECAST: Gilts seen volatile on Tuesday.

(Compiled by Sitanshu Swain)