Market Round-Up

Updated: May 20 2003, 05:30am hrs
Call Money
Call rates remained range-bound between 4.75-5.00 per cent and closed at the same level as the previous closing, in a lacklustre trade on Monday. Thus, the call rates, which were edging close to the retpo rate of 5 per cent during the previous couple of sessions, has remained below that rate on Monday. Opening at a rate of 4.75-5.00 per cent, the call rates have traded in the same range. There was no much movement today and the market was having ample liquidity, a private bank said. Even the auction of Rs 5,000 crore floating rate bonds issue has been oversubscribed without putting much pressure on the market. The RBI has accepted all the 36 bids for Rs 16,155 crore through the daily repo window, and seven bids for Rs 8,835 crore from the fortnightly repo window, both at a cut-off rate of 5 per cent. Meanwhile, NSE pegged its overnight Mibid and Mibor at 4.84 per cent and 5.02 per cent respectively.
FORECAST: Call rates seen steady on Tuesday.

Spot Dollar
The rupee gained overwhelmingly by above 15 paise against the dollar by closing at 46.99/47.00, even as the state run banks lent support to the falling dollar. This is against the previous close of 47.1450/1500. Opening the day at 47.10/11, the rupee weakened to touch 47.1050/1100. But started gaining later consistently, before the state-owned banks through their weight around the dollar for a brief while, but the rupee gains continued after that taking the rupee to the 24-month high of 47.99/47.00 at close. The comment of the US Treasury secretary that he will abandon the 8-year old American strategy for strong US dollar against most of the currencies, has led to the free fall of dollar, a foreign bank dealer said. In the forwards market, there was a sharp fall seen again in the premiums across all maturities. Meanwhile, the RBI fixed its reference rate for dollar at 47.06 against the previous rate of 47.14.
FORECAST: The rupee seen gaining on Tuesday.

Forward Premiums
Forward premiums fell across all maturities to the record lows, on the back of spiralling rupee in the spot market. Both the six- and 12-month annualised premia dipped to 0.71 per cent (1.00 per cent) and 0.77 per cent (1.20 per cent) respectively. The forwards opened a little lower than the previous close, and continued the southward sojourn backed by the general negative sentiment against the dollar, a foreign bank dealer said. Fall in inflation also helped this trend, a private bank dealer said. The WPI eased to 6.03 per cent by May 3 from a two-year high of 6.47 per cent on April 12. The premium for May 2003 closed at the previous level of 1.00/25 paise. The benchmark six-month dollar premium, payable at end-October, closed at 18/19 (21.50/22.50 paise). In month-wise premia in the far forwards, the March 2004 dollar and April dollar closed at 24/25 and 31/32 (41/42 paise and 49/50 paise) respectively.
FORECAST: Premiums seen falling on Tuesday.

Gilts
The government securities prices gained by 30-45 paise, higher in the longer end maturities, compared to previous closes. Opening at higher then Saturdays closing levels, the G-Secs continued their northward journey to close at higher levels. Positive developments in the forex spot market were the main boosters for the sentiment in the market, a dealer said. There is a strong case for effecting a repo rate cut. But the RBI may wait till the US Fed to do that first, so that it would not affect trade balance, a foreign banker said. Meanwhile, RBI fixed a mark-up of 14 basis points for 11-year floating rate bond for the first year. The benchmark 10-year 9.81% paper closed at 129.60. The 11.40% 2008 shorter maturity paper closed at 127. The 8.07% 2017 bond closed at 118.40. The 8.35% 2022 paper closed at 123. On the NSEs WDM volumes of Rs 7,882 crore were seen.
FORECAST: Prices seen steady on Tuesday.

(Compiled by BSS Reddy)