Market Round-Up

Updated: Jan 30 2003, 05:30am hrs
Call Money
Call rates ruled easy on Monday on the back of comfortable liquidity in the interbank call money market. Call rates ended at 5.60-5.75% on Wednesday, lower from Tuesdays closing levels of 5.75-6.00% after trading actively around 5.70-5.75%. Call rates opened at around 5.75-6.00%. As the war clouds seemed to be receeding banks became more comfortable with lending money as compared to Tuesday. On Tuesday banks were reportedly edgy over lending and preffered to keep liquid cash in the face of the uncertainty. During the day there was a steady demand for funds from players, coupled however supplies tightened at times owing to a volatile government bond market. The RBI accepted all five applications for a modest amount of Rs 1,060 crore at the one-day repo auction today at the cut-of price of 5.50%.
FORECAST: Call rates to rule easy on Thursday

Spot Dollar
The rupee ended at yet another 13-month closing high on Wednesday. Dealers said that the globally weakening dollar was primarily responsible for the rupees surge during the day. The rupee ended at Rs 47.8200/8275, a level last seen on December 21, 2001 and firmer than Tuesdays close of 47.8825/8900. The rupee has now gained 2.6 per cent from its lifetime low of Rs 49.08, hit in mid-May, and 0.3 percent since January 1. Traders still expect the rupee to strengthen in the next few days albiet slowly due the the changing scenario in Iraq. Some hard statements by the US president George W Bush in his recent speech did not rule out a possibility of a war however market feels that it would not come immediately. Currency traders fear an attack on Iraq could lead to a surge in prices of crude oil, Indias biggest import item, accounting for two-thirds of its annual import bill of $60 billion.
FORECAST: Rupee to stay firm on Thursday.

Forward Premiums
Forward premia soared for the fifth consecutive day even as the rupee strengthened to touch another 13 month high on Wednesday. War fears were responsible for driving the premia up. Even though the market today saw war fears receeding, corporates thought it was prudent to cover their positions and hence increased demand, said dealers. The six-month annualised forward premium closed at 3.85 %, up from the previous close of 3.73%. The six-month annualised premium has risen nearly 60 basispoints in the past week as importers and companies priced in the risks of an impending war. The month-wise premia for the short term were, 15/17 paise for February, 30/32 paise for March and 47/49 paise for April. In the far forwards November dollar was at 136/138 paise, December dollar was at 149/151 paise.
FORECAST: Forward premia to remain firm on Thursday

Gilts
G-Secs rallied back on Wednesday on the back of receeding war fears. Aonther prominent factor that helped G-Secs post a comeback were expectations in the market that the central govt will not tap the market for pre paying its external debt and would instead privately place bonds with the RBI. Government paper prices were seen up in the range of 60-145 paise across maturities as banks showed interest in fresh buying. Fresh buying interest was brought about by indications that there may not be an immediate war in the middle east aided by the contemplation that the govt may not suck out money from the market for prepaying its external debts, said dealers. The 7.40% 2012 stock ended higher by 85 paise at Rs 109.55 and the actively traded 11.55%, 2011 paper shot up by 90 paise to Rs 136.70. The benchmark 9.81%, 2013 stock jumped by 80 paise to Rs 128.40 and the 9.85%, 2015 bond spurted by 50 paise to Rs 132.15.
FORECAST: G-Sec prices to remain firm on Thursday

Compiled by Abhijit Agrawal