Call rates ruled tight on Monday on the higher pressure of funds due to the outflows towards the on-tap state-government auctions. Opening the day at around 5.70%, call rates mounted to rule at around 6% in the late morning session. The intra-day high was seen at 6.25% level. However most of the deals were struck at 6%, dealers with state-run bank said. For the on-tap sale of the 6.80% 2012 paper for a target amount of Rs 3,340 crore, market players had to provision higher, as no one was sure what will be the amount accepted, and that leads higher outflow and in turn, tighter call rates, dealers reasoned. The RBI partially accepted seven bids for Rs 1,790 crore at its one-day repos-auction. It received seven bids for Rs 3,580 crore. Meanwhile, the NSE pegged its Mibid and Mibor at 5.71% and 5.82% respectively.
FORECAST: Call rates seen easy on Tuesday.
The rupee continued to close higher for the sixth consecutive day and was at 48.0025/0125 at the close of Mondays trades. The rupee opened at 48.00/01 and with the comfort from accumulated dollar supply over the weekend, touched 47.9775 level in morning deals. However, RBI intervened into the market soon through state-run banks and bought dollars to support it at 48.00 level. But once the buying pressure was over, the rupee again rose to 48.0025/0125 towards the close. Forex inflow continued as it is, a dealer said. Medium-term outlook for the rupee remains positive against the background of unabated dollar inflows and also due to further easing of forex regulations by the RBI on Saturday. Dollars fall to multi-year lows against other major currencies bolstered the sentiment. Meanwhile, the Reserve Bank of India (RBI) fixed its reference for dollar at 47.99 (48.05).
FORECAST: The rupee seen gaining on Tuesday.
Forward premiums closed slightly lower on Monday. Both the six-month and the one-year annualised dollar premiums closed lower at 3.69% (3.74%) and 3.38% (3.42%) respectively. Forward premiums ended lower tracking the steady rupee appreciation, dealers said. Tighter call rates did not have impact on the premiums, as there was good receiving interests shown by banks amidst a favourable outlook for the rupee. The rupee closed at 48.0025/0125 level while call rates closed higher at around 6% level. In month-wise premiums, the December dollar closed at 2/3 paise while the March dollar closed at 44/45 paise. In the far forwards, the June dollar closed at 88/89 paise with the September and November dollar closing at 130/131 paise and 153/154 paise respectively.
FORECAST: Forwards seen steady on Tuesday.
Government securities prices fell on Monday amidst tighter liquidity condition in the system. Longer-end papers fell on an average by 35-40 paise while that of the medium-end papers by around 15-20 paise. The benchmark 10-year yield on the 7.40% 2012 paper closed at 6.2969%, up from Saturdays record closing low of 6.2634%. Yield on the 8.07% 2017 paper rose to 6.5220%. Heavy bidding for the on-tap state-government auctions of the 6.80% 2012 paper for a target amount of Rs 3,320 crore put pressure on the liquidity, dealers said, adding that this led to some profit-booking. The auctions got overwhelming response from the market players and closed with over-subscription. Traded volume was lower on Monday. At NSEs wholesale debt segment, trades worth Rs 4,539.21 crore was see.
FORECAST: Prices seen rising on Tuesday.
(Compiled by Atmadip Ray)