Market Round Up
Call MoneyThe overnight call money opened at 9.25-9.50 range on Friday, at a much higher level compared to Thursday's close of 9.00 to 9.25 per cent. In the morning, the rates ruled in the region of 9.25 to 9.75 per cent. Some stray deals were done in the region of 9.50 to 10 per cent. The rate eased during the later half of the day and finally closed at 8.75 to 9.00 per cent, said Securities Trading Corporation of India. "Reduced supply tightened the call market as lending from banks came down in the morning session though supply stabilised in the afternoon session as institutions stepped in," said a dealer. The weighted average of the securities trading corporation of India was 9.22 per cent on a turnover of Rs 1000 crore. FORECAST: Call rate to open in the range of 9.00 to 9.25 per cent on Saturday. Spot Dollar The spot rupee remained range bound on Friday as the market continued to be thin due to the RBI strictures to banks, preventing them from taking overnight positions.The spot rupee opened at 39.68/72 and weakened to 39.74/76 during the day. "Most of the deals were transacted at these levels", a dealer in a private sector bank said. The State Bank of India sold in small lots, which saw the rupee strengthening to close at 39.72/74. The Reserve Bank stayed away from the spot market but was aggressively present in the forward market, conducting swaps for spot over July. Dealers said that there was no real demand for dollars from large corporates which has led to a very thin market. "There is hardly any inter bank deal taking place as speculation has come to an end", a dealer in a foreign bank said. FORECAST: The rupee is expected to rule at the same level on Monday. Forward Premiums Forwards continued to react sharply as corporates continued to cover. "Genuine import covering led to huge forward covering by corporates which saw six month forward premia soaring to a high of 15 per cent", a dealer in a private bank said. The Reserve Bank intervened in the
forward market and conducted swaps for spot over July to calm the volatility. Six month forwards eventually closed at 10.95 per cent after the RBI intervention. The Reserve Bank conducted swaps for an estimated $200 million for July maturities, dealers said. "Corporates are unsure of the situation and this is leading to such uncertainty. Add to this is the Moody's review which is driving premia up", a dealer in a foreign bank said. One month forwards closed at 17 per cent after touching a high of 20 per cent while one year forwards closed at 9.6 per cent. FORECAST: Forwards will rise unless the RBI intervenes more aggressively. Gilts Prices of government securities fell by nearly 40 paise across the board on Friday. "The market mood was down during the day with most players turning sellers", said a dealer with a private sector bank. "With call rates touching 10 per cent during the day, it had its impact on securities", he added. "Call rates touched the 10 per cent mark since most
lending banks turned borrowers", said another dealer. The wholesale debt market segment of the National Stock Exchange witnessed trades of Rs 346.62 crore on Friday. The most actively-traded securities included the 11.15 per cent 2002 government loan, traded for Rs 45 crore and the 12.59 per cent 2004 government loan, which saw trades worth Rs 15 crore. Repo trades worth Rs 155.25 crore were transacted during the day. The total value of debentures traded during the day amounted to Rs 6.04 crore. FORECAST: Yields expected to rise as prices fall further.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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