Market Round-Up

Updated: Jan 25 2003, 05:30am hrs
Call Money
Call rates ended sharply lower on Friday. The primary reason for the drop in the rate was lack of demand as a result of significantly improved liquidity and the fact that it was the reporting Friday. Call rates closed at around 5.40-5.60 per cent levels, sharply down from its previous close of 5.70-5.80 per cent. Deals were struck in a range of 5.25-6.10 per cent with most of the transactions being done in the region of 5.90-6.00 per cent. Call rates opened around 5.90-6.10 per cent. Demand for funds was limited, as most of the operators had covered their reserve requirements ahead of the reporting Friday. Moreover, liquidity has improved considerably after last weeks open market operation outflows. The RBI mopped up a meagre Rs 815 crore at the three-day repo auction today at the cut-off price of 5.50 per cent, under the liquidity adjustment facility.
FORECAST: Call rates to remain easy on Saturday.

Spot Dollar
Rupee gained more on Friday ending at a 13-month closing high for the third day in a row. The rupee touched an intraday high of Rs 47.87 before the concerns about the prospects of a war in Iraq dragged it down to close at Rs 47.8850/8925 above Thursdays levels of Rs 47.8950/9050. A treasury head with a private bank said that the situation remained volatile in the market the whole day and that there was a lot of supply. The demand was seen mostly from state-run banks and corporates. The UN weapons inspectors report to be submitted on Monday also added to the anxiety which pulled the rupee down he added. A robust exports, high expatriate investments and remittances, and more recently, higher foreign fund investments, have all been supporting the rupee. The RBI today fixed the reference rate for the us dollar at Rs 47.87, four paise lower than Thursdays fix of 47.91.
FORECAST: Rupee to stay firm on Monday.

Forward Premiums
Forward premia gained more ground on Friday after a sustained period of easiness. Demand in the forward market came primarily from corporates who were covering their positions in wake of the war threat in Iraq. Traders reported a large purchase of June dollars for an estimated $80 to $100 million. The annualised six-month premium closed at 3.40%, sharply above the previous days 3.23% level. But premiums are still down by around three-and-half percentage points from last summers levels, having fallen as a result of the rupee rise. But traders expect premiums not to rise much more as the outlook for the rupee remains stable to firm. The month-wise premia for the short term were, 1.0/2.5 paise from January, 14/16 paise for Feb and 26/28 paise for March. In the far forwards Oct dollar was at 113/115 paise, Nov dollar was at 124/126 paise and December dollar was at 135/137 paise at the end of the day.
FORECAST: Forward premia to remain ease a bit on Monday.

G-Sec prices dropped considerably on Friday. The fall in prices was mainly on account of unwinding of positions by market players and profit booking. G-Sec prices fell by as much as 60-70 paise before gaining some ground later in the day. A treasurer at a private bank said that this was also a correction that was required and the prices will gain ground again. most action was seen in select bonds at the medium and longer end which attracted profit-selling whereas volumes in short end securities remained low. Prices fell by 10-20 paise in the medium-term while those at the longer end declined by 25-50 paise, dealers said. The 7.49 per cent, 2017 paper closed lower by 25 paise at Rs 113.40 and the 7.46 per cent, 2017 paper dropped by 30 paise to Rs 113.30/35. The 8.35 Per cent, 2022 stock ended sharply lower at Rs 123.30.
FORECAST: Gilt prices to slip a bit on Saturday

Complied by Abhijit Agrawal