Call Money
The call money rates ruled steady on Wednesday and moved in an extremely narrow range as the market was flush with funds. The call rates opened at 7.00-7.05 per cent and hovered in a narrow band of 7.00-7.10 per cent for most part of the day. They closed at 7.00-7.05 per cent, compared with the previous close of 6.75-7.00 per cent. The funds were available easily and borrowers met their full requirements which kept the interest rates in a narrow range, dealers said. The reason for the sudden and excess liquidity was the repayment of the repos held on Saturday.The weighted average call rate of the Securities Trading Corporation of India (STCI) was 6.99 per cent in a business turnover of Rs 1,400 crore, while the market support from the Discount and Finance House of India (DFHI) was Rs 1,500 crore, sources said.
FORECAST: The call rates are likely to remain rangebound on Thursday.
Spot Dollar
The rupee weakened on Wednesday as the inter-bank market turned bullish onthe greenback. But, the State Bank of India's dollar sales saw the rupee recover to close at 39.70. The rupee opened at 39.72, lower than the previous close of 39.68, and was soon seen testing the 39.74 level. "The rupee opened weaker on reports that it will cross the 40 barrier this fiscal. It was not corporate demand that affected the rupee, but sentiment of a weaker rupee," inter-bank dealers said.
The State Bank sold dollars at 39.74, which saw the rupee rallying to 39.70. "The dollar was, however, bid at 39.70 and the rupee did not go stronger and closed at the same level," a dealer with a European bank said.
The dollar's high for the day was 39.74, while its low was 39.70. The Reserve Bank of India pegged its reference rate for the greenback at 39.73, compared with its previous peg of 39.70.
FORECAST: The rupee is seen in the 39.72-39.75 band on Thursday.
Forward Premiums
The premiums opened weaker as outflows on account of the state-loan auction impacted on the forward market.The six-month annualised forward cover ended at 6.87, marginally weaker than the previous close of 6.85 per cent.
Near-term premiums closed little unchanged from the previous close, but long forwards weakened by 7-10 paise.
"There was receiving pressure up to July, but there was little covering," said a dealer with a British bank. Long forwards quoted slightly weaker with January premiums closing at 226/230 paise, February at 249/253 paise and March at 279/282 paise. "The market expects easy liquidity and lower interest rates to prevail only till the first half-end," said a dealer with a brokerage.
FORECAST: The six-month annualised cover is seen in the 6.82-97 band on Wednesday.
Gilts
The secondary market for government securities was active on Wednesday with volumes picking up in anticipation of a fresh infusion of funds after the credit policy. Prices, however, remain rangebound with a slight upward movement.
The RBI announcement to retain the oversubscription amount in thestate government securities auction also spurred the activity. The wholesale debt market segment of the NSE witnessed trades worth Rs 795.76 crore. The 11.75 per cent government loan maturing in 2006 was traded actively for Rs 155 crore at a weighted yield of 11.71 per cent. The 13.05 per cent government stock maturing in 2007 was traded for Rs 30 crore at weighted yield of 11.75 per cent. The zero-coupon government bond maturing in 1999 was traded for Rs 53 crore at a weighted yield of 8.19 per cent. The 364-day T-bills were traded for Rs 30 crore.
FORECAST: The government securities prices are likely to remain rangebound on Thursday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
