Market Round-up

Updated: May 21 2003, 05:30am hrs
CALL MONEY

Call rates closed steady at 4.80/5.00 on Tuesday, but touched an intra-day high of 5.10 per cent due to some pressure on liquidity in the wake of floating rate bond issue sucking out Rs 5,000 crore from the system on Monday. The rates slightly edged up to 5.10 per cent by noon, but settled in the range of 4.80-5.00 after the RBI accepted less than the bid amount in the repo market by Rs 3,500 crore, a dealer said. The RBI has only made partial allotment to stem the rise in the call rates witnessed in the morning session, another dealer said. The auction of 11-year FRB issue has been oversubscribed. The RBI has accepted all the 35 bids but partially for Rs 14,356 crore against the bid amount of Rs 17,945 crore through its daily repo window. Market players see this move as a precursor to the announcement of an OMO. 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 Wednesday.

SPOT DOLLAR

The rupee continued its gaining streak by moving up against the dollar by another nine paise to close at 46.90-91 on the back of sustained dollar inflows from exporters and investors. With this the total gain in the two-day trading ending Tuesday is about 24 paise. Even the support lent to dollar from some state-run banks for a while did not stop the rupee gains. Opening the day at 46.9750/9850, the rupee weakened on buying pressure to a low of 46.9850, before the rupee gained to close at a 24-month high of 46.90/91. The early dollar gains in London money market on Tuesday in the wake of Japan central bank buying dollwr in the market could not be sustained in the next few days, a foreign bank dealer said. In the forwards market, there was a sharp fall seen again in the premiums with higher fall at the longer-ends. Meanwhile, the RBI fixed its reference rate for dollar at 46.94 against the previous rate of 47.06.
FORECAST: The rupee seen gaining on Wednesday.

FORWARD PREMIUMS

Forward premiums fell across all maturities to new record lows, but the fall at the longer-ends more striking with the premiums falling to less than half levels of Monday. Both the six- and 12-month annualised premia dipped to 0.48 per cent (0.71 per cent) and 0.35 per cent (0.77 per cent) respectively. The forwards opened lower than the previous close, and continued to dip taking cue from the spot market. The steep fall in far farwards was also due to lack of pairs in the market, a foreign bank dealer said. People are expecting the premiums to touch zero per cent level in the near future, another dealer said. The premium for May 2003 closed almost at the previous level of 1.00/50 paise. The benchmark end-October premium, closed at 8.00/50 (18/19 paise). In month-wise premia in the far forwards, the March 2004 dollar and April dollar closed at 12/13 paise and 15/16 paise (24/25 paise and 31/32 paise) respectively.
FORECAST: Premiums seen falling on Wednesday.

GILTS

The government securities prices gained by one-15, compared to previous closes. Opening at lower levels levels than the previous close, the G-Secs continued their northward journey to surging above the Mondays levels, before closing lower than the intra-day highs. Rupees further gains in the spot market have helped to boost the prices in the market, a state-owned bank dealer said. The case for repo cut has got strenghtened by the firming up of rupee again today. It is expected to happen anytime now, a foreign banker said. The benchmark 10-year 9.81% paper closed at 129.68 (129.60). The 11.40% 2008 shorter maturity paper closed at 127.10 (127.00). The 7.40% 2012 bond closed at 110.94 (110.93). The 8.07% 2017 bond closed at 118.54 (118.40). The 8.35% 2022 paper closed at 123.10 (123.00). On the NSEs wholesale debt market, volumes of Rs 5,163.53 crore were seen.
FORECAST: Prices seen steady on Wednesday.

(Compiled by BSS Reddy)