Market Round-Up

Updated: Aug 25 2004, 05:59am hrs
Call Money
There was hardly any demand for call money today even as trading volumes in government securities was thin as public sector banks stayed away from the market on account of a days strike called by trade unions. Call money ended at three per cent levels as against the previous close of 4.00-4.25 per cent. The banking system continues to reel under surplus liquidity. This is underscored by the fact that the outstanding at the repo window of the Reserve Bank of India was around Rs 31,500 crore as on August 23. The RBI, on Tuesday, received and accepted eight bids aggregating Rs 1,850 crore at the seven-day repo auction under the liquidity adjustment facility at the fixed rate of 4.5 per cent. The central bank also received and accepted 36 bids aggregating Rs 17,905 crore at the one-day repo auction at the fixed rate of 4.50 per cent.
Forecast : Call money is expected to hover in the 4.25-4.50 per cent band.

Spot Dollar
The rupee closed the day a tad weaker at 46.30/31 to the dollar as against the previous close of 46.2650/2700 in shallow trades. Absence of state-owned banks affected trading in the forex market. The Indian unit opened a tad weak at 46.26/28 as overnight the dollar was ruling strong against other currencies. It traded in the four paise band of 46.26-46.30 per dollar for most part of the day. Importer demand for dollar was the main reason for the rupee to gain ground. Due to the one-day nationwide strike, trading in the foreign exchange market was confined to private sector and foreign banks. The RBI set the reference for the dollar at 46.29. The Indian unit closed unchanged at 46.2650/2700 on Monday as against last Fridays close despite Standard & Poors upgrading the outlook on Indias long-term BB foreign currency rating to positive from stable.
Forecast : Rupee seen trading in the 46.25-46.35 band per dollar.

Forward Premiums
The rupee premiums on the forward dollar ended a shade lower on receiving interest from the market players. The market expects the forwards to come off further as the rupee is seen gaining ground against the dollar as the global crude oil prices have started softening. The benchmark six months annualised forward premium ended the day at .69 per cent as against the previous close of 2.75 per cent. In terms of paise the six months foward finished at 56/57 as against the previous close of 55/57.

The 12 months forward premium ended the day at 2.39 per cent as against the previous close of 2.38 per cent. In paise terms the 12 months foward finished at 104/106 as against the previous close of 104/106.
Forecast : The forward premium is seen ranged.

The gilts market ended up about 40 paise even as yield came off by five basis points. Mondays rally of about Rs 1.50, to an extent, spilled over today. Yields softened as the market thinks that the inflation rate has peaked, global crude oil price will soften, and the Reserve Bank of India will take some measures so that banks do not have to take a big hit on their investment portfolio because of the rise in yields. Yield on the benchmark 7.37 per cent 2014 gilt ended the day at 6.29 per cent (Rs 107.70) as against the previous close of 6.35 per cent (Rs 107.30). Volumes in the gilts market were thin (about Rs 1500 crore) as the state-owned banks stayed away from the market on account of the nation wide one-day strike called by the trade unions.
Forecast : yield on the 10 year paper could stablise at the 6.25 per cent level.

Compiled by Ram Kumar