Market round-up

Updated: Jan 31 2002, 05:30am hrs
Call Money
Call rates continued to remain easy despite the strong demand owing to the ample liquidity in the system. It was hovering around its notional floor the RBI’s refinance rate of 6.5% for most of the day. The ample liquidity in the system due to good inflows and steady supplies kept the rates easy. There was no effect of the on-tap sale on the liquidity. Demand was strong being the start of the new reserves reporting period. Call rates opened slightly above the notional floor but eased as soon as demand thinned. Adequate supplies from lenders pulled down the rates below 6.5%in intra-day trades. Most deals conducted in early trades were done at 6.55-6.65% range. Demand thinned as banks stopped borrowing after they met with their reserve needs. Call rates eased in later trade after demand thinned. Call rates opened at 6.60-6.65% and closed at 6.50-6.60%. Foreign banks were the main borrowers while PSU banks were the main lenders.
FORECAST: Call rates seen range-bound Thursday.

Spot dollar
The rupee touched a new all-time closing low on Wednesday amid limited supplies and strong demand. Strong across the board demand saw the rupee touch an all-time intra-day low of 48.6200/6300 per dollar. Lack of support from state-run banks or from the central bank was the main reason for the rupee to slip, dealers said. "The rupee opened weak and continued to slide from there on. Initially only foreign banks were buying, but later all joined the band-wagon. In intra-day trades even state-run banks were on the bid side of the market, a forex dealer said. Last week the dollar had weakened believed to be because of Standard Chartered Bank actively buying dollars of the market. Overall traded volumes were moderate. The rupee closed at 48.5000/5200 per dollar. The rupee had opened at Rs 48.4300/4400 per dollar.
FORECAST: The rupee seen weak Thursday.

Forward premiums
Forward dollar premium rose sharply in early trade owing to the sharp fall in the rupee. However, forward premiums recovered lost ground after the rupee saw some recovery in late trade. Premiums have been easing rapidly owing to ample liquidity in the banking system and persistent selling in the market. Supplies from banks who had stocked up dollars over the weekend also helped keep forward premiums easy. Trade was relatively easy in the forward premium market after the initial bout of volatility. Receding border tensions have also helped forward premiums to ease. The annualised six-month and one-year forward premia closed at 5.70 per cent and 5.50 per cent respectively. Overall, forward premiums remained range-bound. In month-wise premiums, February dollar traded at 20/21 paise, while in the far forwards, April dollar traded at 69/70 paise with January dollar at 264/266 paise.
FORECAST: Forward premiums seen easy Thursday.

Gilts
Prices in government securities continued to rise on Wednesday. "The prices are going up and in-turn yields are sliding down. Also absence of any market moving factors was the main reason for a relatively quite market," a dealer said. "The market is trading in a smooth upward fashion with no major spurt in demand," the dealer added. The benchmark 10-year (11.03%, 2012) yield dropped to 7.66% level from 7.68% on Tuesday. Prices rose in the morning session and from there saw steady rise in prices. The underlying market sentiment continued to remain bullish as there was ample liquidity in the system. There was no pressure on prices despite the sharp fall in the rupee and also of the on-tap sale which ended Tuesday. An easy call rate owing to ample liquidity helped keep the market sentiment upbeat. Total volumes traded at the NSE wholesale debt segment was Rs 6,187 crore.
FORECAST: Prices seen range-bound Thursday.

Compiled by Srikesh P Menon