The central bank will conduct a price-based auction, using the multiple price method. The earlier tight liquity scenario prevailing for last fortnight appears to be receding.
On Monday for the first time after the liquity squeeze had hit the market, the central bank had not conducted any repo auctions. More over even the call rates stabalised to a range of 5.5-5.6%.
RBI had continusly injected funds through the way of repo auctions during last few days and also a substaintial decrease in reverse repo figures added up to liquity crunch.
However, according to a analyst negative sentiments still prevail in the market. Hence the market participants are very cautious in taking positions. Till date the Centre has raised Rs 1,14,000 crore through market borrowings so far in 2005-06 (April-March).
This accounts to 82.01% of its budgeted gross market borrowing. The government has borrowed Rs 98,000 crore through twenty three bond issues and Rs 16,000 crore through sixteen 364-day treasury bills issues.