Market Round-Up

Updated: May 24 2003, 05:30am hrs
Call Money
Call money held rock steady on Friday amid excess liquidity in the system. Call rates opened at 4.75-5.00% level and stayed at this level throughout the day. There was no much demand for funds from the borrowing participants. The liquidity will get a further boost as the RBI bought dollars heavily from the forex market in the last two trading days. The market will see the inflow in the first part of the next week. However, there were speculations on RBIs open market operation. There were also expectations of a repo rate cut. RBI deputy governor Rakesh Mohan on Wednesday denied such a possibity. The RBI mopped up Rs 23,125 crore accepting all the 41 bids at its one-day repos auction. The response in the repos-auction is a clear indication to the surfeit of inter-bank liquidity. Meanwhile, NSEs overnight Mibid and Mibor rates were at 4.81% and 5% per cent respectively.
FORECAST: Call rates seen steady on Saturday.

Spot Dollar
The rupee closed a tad higher at 46.89/90 per dollar as compared to the previous close of 46.90/91 in a volatile market. The RBI intervention pulled the rupee down in afternoon trades, from its intra-day high level of 46.8625, hit after the euro surged to a all-time high against the dollar. State-owned banks bought dollars at lower levels and thereafter when the rupee was seen touching the 47-mark on heavy dollar buying from both the banks and corporates, they changed themselves into selling mode. The rupee opened the day at 46.90/91 level, steady from the previous close. The intra-day high was 46.8625 with 46.9950 being the intra-day low. Corporates were the main buyer of dollars on Friday and exporters were seen buying following some export cancellations. However, exporters were also seen selling dollars at 46.96/97 level. Meanwhile, the RBI fixed its reference rate for dollar at 46.94 (46.91).
FORECAST: The rupee seen gaining on Monday.

Forward Premiums
The six-month annualised premium closed sharply higher at 1.05 percent (0.54 percent) with the one-year annualised premium closing at 1.10percent (0.61percent). Corporates booked profit in the forward market as the rupee is likely to remain within a range between 46.75 and 47 for a while on RBI intervention. There were a few export cancellations as well which forced the exporters to buy forward contracts. Some corporates were also covered the forward risk of their external commercial borrowings. The Reserve Bank of India (RBI)intervention also forced importers to sell forward dollars at the near-term. In month-wise premia, the May dollar closed at 0.50/1.50 paise, while in the far forwards, the March 2002 dollar closed at 38/40 paise with the April 2004 dollar closing at 45/47 paise.
FORECAST: Forwards seen tightening on Monday.

Gilts
G-secs prices rose on Friday as players expected the RBI to reduce the repo rate to curb the arbitrage opportunity. Some dealers expect the central bank to announce an OMO to suck out the excess liquidity from the system. Heavy sterilisation in the forex market will boost the liquidity up further and this would be reflected in the next week. So, the G-sec market is quite bullish, dealers said. The benchmark 10-year yield on the 9.81% 2013 paper was seen at 5.7879%. Major movement were seen at the 7.27% 2013, 8.07% 2017 and 7.46% 2017 papers. These papers closed with 25-35 paise gains, dealers said. There is excess liquidity in the system which was evident from the fact that the RBI mopped up Rs 23,125 crore at its repo window. At the NSEs wholesale debt segment, traded volume of Rs 9,759.22 crore were seen.
FORECAST: Prices seen rising on Saturday.

Compiled by Atmadip Ray