Rupee moves up, gilts rise by 40-45 paise

Mumbai, April 19 | Updated: Apr 20 2005, 05:40am hrs
Beginning the week on a strong note, the rupee finished Tuesday at 43.7625/7675 a dollar as against Fridays close of 43.8225/8300, on the back of renewed dollar weakness in the overseas market, and weekend dollar supplies hitting the market. Monday was a holiday being Ram Navmi. The rupee opened at 43.74/76, up eight paise against Fridays close, but good buying by foreign banks and oil companies pushed the rupee to an intra-day low of 43.78, before closing at 43.7625/7675, said a dealer of a private bank.

The government securities market received a boost from the results of the scheduled auction of government bonds, which saw a positive demand and attracted a higher-than-expected price, with prices of key gilts shooting-up by 40-45 paise, coupled with a slide in global crude oil prices, which was at nearly $51 a barrel, said a primary dealer .

There was increased buying interest from nationalised banks. While the benchmark 10-year paper was not favoured on Tuesday, the 6.85% sock maturing in 2012 traded well, quoting at Rs 99.92 at closing against the opening price of 99.45, giving a yield of 6.86%, against the mornings yield of 6.88%, the dealer said.

Yield on the benchmark 10-year 7.38% 2015 stock ended at 7.07% against the previous close of 7.08%. Meanwhile, volumes remained rangebound at about Rs 2,150 crore, as reported on NDS, of which, treasury bills accounted for Rs 1,250 crore worth. RBI set a cut-off price of Rs 104.50 for the re-issued 8.07% 2017 bond, the cut-off yield being 7.485%, while the cut-off price of the 7.50% 2034 bond was Rs 95, giving a yield of 7.941%.

However, sentiments are cautious with the stock market ending 22 points negative, amid fears that this indicated a slowdown of foreign institutional inflows. Foreign funds have invested nearly $4 billion in stocks so far this year, almost half the record $8.5 billion in 2004.

Meanwhile, the forward markets remained dull despite a small amount of paying interest corresponding to purchases in spot. The six-month annualised premium ended at 1.83% as against the previous close of 1.86%, while the 12-month annualised premium ended the day at 1.55% against the previous close of 1.57%.

The call money market remained rangebound, as call rates remained easy on the back of ample liquidity in the banking system. Call rates ended at 4.6-4.7%. RBI received Rs 31,725 crore at the one-day fixed rate reverse repo auction on Tuesday at 4.75% under LAF.