Market round-up

Updated: Jul 27 2002, 05:30am hrs
Call Money
Call rate continued its easy trend on Friday. Despite being the reporting Friday there was absolutely no pressure on call. Banks seemed to be comfortable with their reserve needs. Outflows towards open market bond sales conducted by The Reserve Bank of India (RBI) had little impact on call rates. “Demand was thin as most banks had met with their reserve needs in the last week itself,” a dealer said. “Along with comfortable liquidity, good supplies throughout the day kept call rate easy,” dealers said. Call opened at 5.65-5.75% and closed unchanged. RBI accepted all the bids worth Rs 9,905 crore, it received at its daily repos auctions at a cut-off price of 5.75%. There was no response to the RBI’s reverse-repos auction.
FORECAST: Call rates seen easy on Saturday.

Spot Dollar
The rupee continued to remain strong against the dollar on Friday. Persistent inflows from exporters and the ongoing weak trend in the dollar in the overseas market saw the rupee strengthen. “Periodic demand from state-run banks kept the rupee from posting sharp gains,” a forex dealer said. Strong inward dollar remittances were met by persistent mopping up of dollar by state-run banks which kept the rupee in a narrow range. State-run banks are believed to be mopping up dollars on the behest of the central bank. It is undervalued by over five per cent on a trade-weighted basis given the dollar’s weakness overseas. At the closing level the rupee is at a 5-month closing high. The rupee had opened at 48.6850 per dollar and ended with gains at 48.6750/6800 per dollar.
FORECAST: The rupee seen firm on Monday.

Forward Premiums
Forward dollar premiums continued to ease on the back of comfortable liquidity Market players said that there was not much impact on liquidity in the banking system. However traders preferred to remain cautious on expectations of another round of open market sales. Except for a brief rise on Wednesday, forward premiums have remained easy for most of the week. Easy call rate and huge amount received at the repos has kept the underlying market sentiment bullish. The 6-month annualised forward premium closed lower at 4.45% and 12-month premium closed at 4.52%. Month-wise premiums in paise were: August 16.5/17 paise, September 33/34 paise and October 53/55 paise. In the far tenor May premiums was at 183/184 and June was at 201/203.
FORECAST: Forward premiums seen easy on Monday.

Gilts
Government securities prices gained on the back of ample liquidity Renewed hopes on a bank rate cut also fuelled the bullish market sentiment. “Liquidity continues to remain comfortable and hopes of an open market sales have died down. The 4 bonds sales by the central bank seemed to have little impact on the liquidity in the market.” The good amounts received at the repos auction kept market players bullish that there still is enough liquidity in the banking system. The Reserve Bank of India (RBI) accepted all the bids worth Rs 9,905 crore, it received at its daily repos auctions at a cut-off price of 5.75%. There was no response to the RBI’s reverse-repos auction. The 8.07% 2017 bond eased to Rs 103.06 from Rs 103.03 on Thursday.
FORECAST: G-Secs prices seen range-bound on Saturday.

Compiled by Srikesh P Menon