Market Round Up

Updated: Sep 18 2003, 05:30am hrs
Call Money
Call rates closed at 4.40-4.50 despite of advance tax outflows. Opening the day at 4.40-4.50%, call rates inched up in the morning session on higher demand for funds. A few deals were seen at 4.55% level. The rates eased later after the RBI repos auction. Most deals were seen at the 4.40-4.50% levels. There was early pressure on call rates ahead of the advance tax outflows. But overall the liquidity situation was comfortable, dealers said. The sentiment is comfortable despite the projected fund outflows, because of the expectation that RBI would reduce the CRR further in its October credit policy. There would be outflows towards the advanced tax payments to the tune of Rs 8,000-10,000 crore. The RBI, meanwhile, accepted all the 31 bids it received at its one-day repos auction to mop up Rs 19,050 crore from the system. The NSE pegged its overnight Mibid and Mibor at 4.40% and 4.51% respectively.
FORECAST: Call rates seen steady on Thursday.

Spot Dollar
The rupee slipped further against the dollar to close at 45.9450/9550 on Wednesday. It closed at 45.89/90 on Tuesday. The rupee opened the day lower at 45.92/94 but got the support from the state-owned banks as they sold dollars in the morning trades. At that time, the rupee was seen at 45.90 level. But strong dollar demand pushed the rupee down to its intra-day low of 45.96. The dollars gain in the global market especially against the euro also put pressure on the rupee, dealers said. The rupee might breach the 46 level in September but is unlikely to trade above 46 for a long time because of the steady inflows, a dealer with a state-owned bank said. There was pressure on the rupee as the RBI capped the NRE deposit rates and also banned the OCB inflows. Also the month-end dollar demand will pressurise the rupee in the near term, dealers said. Meanwhile, the RBI fixed the reference rate for dollar at 45.94 as against its previous fix of 45.85.
FORECAST: The rupee seen slipping further on Thursday.

Forward Premiums
Forward premiums inched up on Wednesday amid uncertainty in the forex market. Both the six-month and one-year annualised premiums closed higher at 1.01% (0.91%) and 1.08% (0.99%) respectively. Importers and the corporates which mobilised funds through ECB route shown interest to hedge their near-term payables. The rupee slipped further against the dollar to close at 45.9450/9550 on Wednesday. The pressure on the rupee was due to the new cap on the NRE deposit rates and the ban on the OCB inflows. The benchmark six-month premiums, payable at end-February 2004, closed at 24/26 paise. The near-month premium for September 2003 closed at 3.5/5.5 paise, while in the far forwards, the July 2004 dollar closed at 42/44 paise with the August 2004 dollar closing at 46/48 paise.
FORECAST: Premiums seen inching up on Thursday.

Gilts
Government security prices closed 15-20 paise higher on Wednesday compared to the previous closing levels. The gain was, however, capped by late-profit booking. The current market favourite 7.27% 2013 paper closed with a yield of 5.29%, rising in late trades from its all-time low of 5.28%. There was good trading interest amid comfortable liquidity in the system. Buying interest was seen at the medium term papers, but market players are avoiding buying long term papers as the RBI wants the yield curve to be steep at the longer end. Prices fell at the fag end of the day from their early gains on profit booking. There will be profit booking pressure before the close of the half-yearly accounts in September, a dealer with a bank said. At the NSEs wholesale debt segment, trades worth Rs 7,221.98 crore.
FORECAST: Prices seen rangebound on Thursday.

Compiled by Atmadip Ray