Market Round Up

Updated: Sep 19 2003, 05:30am hrs
Call Money
Call rates closed higher at 4.45-4.60% on late demand for funds. Opening the day steady at 4.40-4.50% compared to the overnight level, call rates held rocksteady at this level during most sessions, before inching up at the fag end of the day. There was late-pressure on the rates ahead of the reporting Friday and advance tax outflows. There would be outflows towards the advanced tax payments to the tune of Rs 8,000-10,000 crore. Call rates opened the day at 4.40-4.50%, and most deals were seen at this level. Overall, the liquidity situation was comfortable, dealers said. The sentiment is positive despite the projected fund outflows, because of the expectation that the RBI would reduce the CRR further in its October credit policy. The National stock exchange (NSE) pegged its overnight Mibid and Mibor at 4.42% and 4.53% respectively.
FORECAST: Call rates seen rangebound on Friday.

Spot Dollar
The rupee closed at 45.9750/9850 against the greenback on dollar buying pressure following export cancellations. The rupee opened the day weaker at 45.95/97 compared to the overnight level of 45.9450/9550. It was under pressure in the morning on wide-scale dollar buying, dealers said. The intra-day low was seen at 46.08. State-owned banks sold dollars at various levels. First they sold dollars at the 46.01 level, then at 46.0350. But the buying pressure was so intense that the rupee could not be prevented from touching the 46.07/08 level. It was estimated that dollars to the tune of about $300 million was bought from the market. Exporters cancelled forward contracts on apprehensions of dollar shortage in the market. The pressure on rupee also triggered stop-loss positions in some banks. A quite a few foreign banks were also seen covering their short-dollar position. Meanwhile, the Reserve Bank of India (RBI) fixed the reference rate for dollar at 46.08 (45.94).
FORECAST: The rupee seen dipping on Friday.

Forward Premiums
Forward premiums tightened following the pressure on the spot-rupee. Both the six-month and one-year annualised premiums closed higher at 1.14% (1.01%) and 1.30% (1.08%) respectively. Substantial rise was seen at the longer-end premiums which closed around 10 paise higher than their overnight levels. Banks reversed their buy-sell swaps positions following the export cancellations. Exporters cancelled forward contracts on apprehensions of dollar shortage in the market in the end of September. Importers and the corporates which mobilised funds through ECB route also shown interest to hedge their near-term payables. The benchmark six-month premiums, payable at end-February 2004, closed at 25/26 paise. The near-month premium for September 2003 closed at 3.25/4 paise, while in the far forwards, the July 2004 dollar closed at 52/53 paise with the August 2004 dollar closing at 56/57 paise.
FORECAST: Premiums seen inching up on Friday.

Gilts
Government security prices fell on Thursday on profit booking. The current market favourite 7.27% 2013 paper closed with a yield of 5.3125% as compared with Wednesdays 5.2890%. The profit booking pressure is getting intense ahead of the close of the half-yearly accounts in September and the advanced tax outflows. The liquidity situation was still comfortable with the RBI accepting 26 applications for Rs 16,185 crore at its one-day repos auction. There was, however, late buying interest which helped minimising the price-loss. Overall sentiment was uncertain ahead of the RIB redemption, a treasury head with a state-owned bank said. At the NSEs wholesale debt segment, trades worth Rs 4,299.93 crore. Maximum trading was seen at the 7.46% 2017 paper with a trading volume of Rs 475 crore.
FORECAST: Prices seen rangebound on Friday.

Compiled by Atmadip Ray