Market Round-Up

Updated: Nov 15 2003, 05:30am hrs
Call Money
Call rates came under slight pressure on reporting Friday due to last minute adjustments in the absence of major lenders. Call rates opened and closed at the same level of 4.40-4.50%, up from its overnight close at 2.50-3.00%. Meanwhile, the RBI accepted all 48 applications for a total sum of Rs 16,815 crore at the three-day repos auction on Friday at the cut-off price of 4.50%, indicating the level of liquidity in the system. Sterilisation of forex inflows by the RBI is infusing liquidity. While foreign funds have invested a total of $5.9 billion in local shares and bonds in 2003 till last week and reserves have risen to $92.59 billion in the week ended October 31, from $91.89 billion in the previous week, there is a feeling that tighter norms on the external commercial borrowings (ECB) front may tighten rupee liquidity. However, portfolio inflows are expected to come in. The NSE pegged its overnight Mibid and Mibor rates at 4.34% and 4.49% respectively.
FORECAST: Call rates seen at current levels on Saturday

Spot Dollar
The rupee closed lower against the dollar with fears of a cash-dollar shortage still lingering. Opening the day at 45.35/36, the rupee rallied smartly against the dollar in early trades helped by fresh exporter dollar sales amidst receding demand. The rupee gained to 45.34/35 in opening deals, but it then dipped to close at 45.4150/4250, the weakest level since October 15, a dealer said, adding: Renewed exporter dollar sales led to unwinding of long dollar position by banks. This helped the rupee gain, but operators are still cautious and nervous about worries over cash dollar supplies. The rupee declined by four paise on Thursday. Sentiment turned weak for the rupee after the overnight tightening of ECB guidelines. The rupee has dipped by about thirteen paise in the last four trading session dragged down by heavy dollar demand amidst concerns of an acute cash dollar shortage. Meanwhile, the RBI fixed its reference rate for the dollar at 45.3500 from its overnight 45.3900.
FORECAST: Rupee seen at 45.40 levels on Monday.

Forward Premiums
Forward premiums edged up on renewed paying pressure as the dollar moved into premium in the cash market. The sixth month annualised forward premium ended at 0.31%, up from its overnight 0.25%. Cash/spot and cash/tom closed of 0.50-60 paise and 25-30 paise respectively. The month-wise premium in paise were: November (-1/0), December 0.5/1.5, January 1/1.5, February 2.5/3.5, March 3.5/5.0 and April 5/6. The fall in the bourses, concerns of dwindling foreign inflows and the RBIs buying prompted importers to buy dollar ahead of the weekend holidays. State-run banks also reportedly bought dollars heavily, a dealer said. The weakness in the spot-rupee, which closed at 45.4150/4250, is seen as an all out of the recent Resurgent India Bonds redemption and the maturing of forward contracts rolled over last month, which resulted in a cash-dollar shortage. This saw paying interest coming in and premiums went up.
FORECAST: Forwards may inch up on Monday.

Gilts
Government security prices continued to reel under selling pressure with yields rising further as hopes of a rate cut receded in the near-term after some overseas central bank raised key interest rates. Concerns over tightening of liquidity, following tighter ECB norms weighed on bond prices, coupled with a rise in inflation rates to 5.01% from 4.96% in the previous week. Short-term paper dropped by 10-20 paise while those at the medium to longer end by 25-40 paise. The benchmark ten-year yield moved up to 5.13% from its overnight 5.11% with the 7.27% 2013 stock ending at Rs 116.40/45 sharply lower from Rs 116.60/65. The 9.81% 2013 dipped to Rs 134.70 (Rs 135), the actively traded 8.07% 2017 moved down to Rs 124.10/14 (Rs 124.30/32), and the 7.46% 2017 to Rs 118.75/80 (Rs 119.25/30). On the NSEs wholesale debt segment, trades worth Rs 4,079 crore were seen.
FORECAST: Prices may gain a tad on Saturday.

Compiled by Raghu Mohan