Market Round-Up

Updated: Jan 28 2003, 05:30am hrs
Call Money
Call remained steady on Monday even though it ended lower at 5.30-5.40% levels, from previous closing levels of 5.50-5.60% after trading in a range of 5.40-5.45% range for most of the day. Opening the day at around 5.50-5.60% level call rates dipped a bit due to easy liquidity. A dealer with a private bank said that the market remained volatile with trades eing rangebbound. The Reserve Bank of India mopped up around Rs 1,135 crore at the one-day repo auction today at the cut-off price of 5.50 per cent from 7 applications and under the fortnigtly repo auction (14-day), RBI accepted all three bids for Rs 960 crore. Due to the war fears and falling G-Sec prices banks were not borrowing heavily. Volumes of close to Rs 3000 crore were seen in the market.
FORECAST: Call rates to remain easy on Tuesday

Spot Dollar
Rupee ended weaker on Monday after a sustained period of rising ending at Rs 47.9050/9150, off the mornings levels of Rs 47.8750/8825 and weaker than Fridays close of 47.8850/8925, which was a 13-month closing high. Dealers said that UN weapons inspectors submittion of report on Iraq played its part in the weakening of the rupee. UN inspectors are to submit their report to the SecurityCouncil, but the United States has said it would go to war alone against oil-rich Iraq even if it could not muster support among a deeply divided world community. Concerns about the impact on crude oil prices of a war in the Middle-East is the primary reason for the apprehension of dealers. If prices of crude oil, Indias biggest import item, rise there could be downward pressure on the rupee. hike in prices would therefore lead to a higher foreign exchange out go.
FORECAST: Rupee may weaken on Tuesday

Forward
Rupee premiums on the forward dollar rose sharply as more and more corporates hedged future payables amid uncertainty in the Middle East. The annualised one-year forward rose to close at 3.18 per cent up from Fridays close of 3.05 percent. Traders expect more importers to hedge positions in the next few days as war clouds gather. A forex dealers said: "There was importer pressure in the market and we think that this pressure will remain for some time to come." Even corporates were seen hedging their positions during the day. The month-wise premia for the short term were, 1.00/2.00 paise from January, 14/16 paise for February and 27/29 paise for March. In the far forwards October dollar was at 119/121 paise, November dollar was at 130/134 paise and December dollar was at 141/143 paise at the end of the day.
FORECAST: Forward premia to remain ease a bit on Monday

Gilts
G-Sec prices declined sharply on Monday. Fears of a US led war against Iraq resulted in on all-round selling which made pries fall in the range of 60 to 70 paise. Medium-tenor papers fell by 40-90 paise while those at the longer end by over 150 basis points, dealers said. A dealer with a new generation private bank said that the downward trend was halted a bit because primary dealers were bbuying papers on the longer end otherwise there was o lot of selling pressur from every quarter. Benchmark, 7.40 per cent, 2012 paper dipped by over 80 paise to Rs 109.60 in intraday deals, before ending at Rs 110.00 on some late buying at lower levels. Actively traded 11.50 per cent, 2011 stock was quoted sharply lower by nearly 90 paise at Rs 136.90 and the 7.49 per cent, 2017 stock was quoted steeply lower by over a rupee at Rs 112.10. The 8.07 per cent, 2017 bond tumbled down to Rs. 117.65at the close of trade from Rs 119.00 previously.
FORECAST: G-Sec prices to remain soft on Tuesday

(Complied by Abhijit Agrawal)