Market round-up

Updated: Apr 25 2002, 05:30am hrs
Call Money
Two-day call rates remained range-bound on Wednesday on the back of ample supplies and moderate demand. Call was dealt for two-day value because of the bank holiday on Thursday. Good supplies from the usual lenders managed to keep call rates from shooting up. Demand was strong in early trades as traders expected the liquidity to tighten following the state loan auction. The fact that the RBI accepted only part amount received at the repo auction also caused concern. The RBI received one bid for Rs 9,200 crore of which it accepted a partial Rs 4,600 crore. Call rates may rise depending on on-tap auction results. They opened at 6.50-6.70%. Strong demand saw them rise sharply to 6.80% in intra-day trades. As demand thinned in late trades they eased to close at 6.50-6.60% levels.
FORECAST: Call rate are seen firm on Friday.

Spot dollar
The rupee recovered from its day’s losses on Wednesday, but not before touching a all-time low of 49.0600 per dollar for a second consecutive day. The currency ended at 48.9650/9750 per dollar. Dollar support from state-run banks helped the rupee recover from its lows. BoB is believed to have bought huge amounts of dollars on behalf of a large corporate for the second consecutive day. In early trades, large state-run banks also were said to have shown keen buying interest. The rupee had opened weak at 49.0100/0200 per dollar and weakened further due to persistent dollar demand seen across the board. Once the demand from BoB was over banks offloaded long dollar positions along with support from state-run banks which saw the rupee erase its losses accumulated over the past couple of days. In cross-currency trades, the euro closed at 43.55, the pound sterling closed at 70.94/96.
FORECAST: The rupee is seen weak on Friday.

Forward premiums
The forward dollar continued to ease on the back of bullish market sentiment on liquidity which emerged after a RBI statement on Tuesday that the central bank continues its stance on lower cash reserve ratio (CRR). Traders interpreted the RBI statement as comfortable liquidity scenario in the near-term and that helped forward premiums ease despite the sharp intra-day fall in the rupee. Ample supplies also kept call rates largely range-bound on Wednesday which prompted selling of forward dollar premiums. The recovery in the rupee in late trades also helped keep the market sentiment upbeat. The benchmark six-month annualised premium was at 5.94 per cent while the one-year annualised premium closed at 5.45 per cent. “Political uncertainties continued to weigh down the market sentiment and trade was moderate,” dealers said. On the month-wise premiums, May dollar closed at 24.5/25 paise, while in far forwards, September dollar closed at 119/120 paise with March 2003 dollar at 246/247 paise.
FORECAST: Forward premiums are seen ranged on Friday.

Gilts
Gilt prices continued to rise on Wednesday as fears of an unscheduled auction faded down. Fears of an auction faded after the news that the government had placed Rs 6,000 crore worth of 9.40 per cent 2012 with the central bank on Tuesday. Prices also rose as hopes of a cash reserve ratio (CRR) cut re-emerged. However, demand was moderate as not many market players wanted to build up large positions ahead of the RBI’s monetary and credit policy 2002-03, scheduled for April 29. Traders said that the falling refinance level and good response at the daily repos auction also indicated ample liquidity in the banking system. The RBI’s ‘on-tap’ state loan auction is expected to tighten liquidity but the pressure on rates will continue to come from news on the political front. However, prices dropped slightly in late trade on light profit-booking. The 11.50 per cent 2011A dropped to Rs 128.96/98 from an intra-day high Rs 129.05/06.
FORECAST: Prices are seen ranged on Friday.

Compiled by Srikesh P Menon