Mumbai, Dec 16: A sharp appreciation in gilt prices is expected on account of advance tax outflows of Rs 7,000 crore over the next fortnight and the increasing number of debt issuances by corporates, says I-Sec in its report.

The report observes that a further price correction is on the cards, and that it would be too premature to conclude that gilt prices have stabilised."The outflow of advance taxes over the next fortnight will provide another shock and a further price correction seems to be due", says the I-Sec report.An estimated Rs 3,000 crore in debt issuance by both private and public sector entities is expected to hit the market over the next two months. Given the sluggishness in credit offtake this year, banks will only be too keen to take an exposure to these debt issuance. "In this scenerio, government securities will be first on the chopping block since most banks would still make substantial profits by switching from SLR assets to PSU/corporate risk, and also improve the yield on the composite portfolio", says the report.

Call rates are expected to tighten in the second half of December and along with another hike in repos rates, short-term liquidity is expected to be affected.

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