The overnight call money rates moved in a narrow range on Tuesday as there was adequate loose liquidity in the system to meet borrowers' requirements.

The call rates opened at 6-6.05 per cent and later fell to 5.90-5.95 per cent at the close. Most trades were conducted around 6.00 per cent.

The Securities Trading Corporation of India business turnover amounted to Rs 800 crore at a weighted average call rate of 5.94 per cent, an STCI official said.

Though most dealers said the market was squarish, some said that it was dominated by lenders. The Reserve Bank of India mopped up Rs 1,015.00 crore at the fixed-rate, 6 per cent repos auction.

The central government has announced an auction of a six-year paper for Rs 4,000 crore on May 8 as part of its gross borrowing programme of Rs 86,000 crore.

FORECAST: The call rates are likely to be rangebound on Wednesday.

Spot Dollar

The rupee opened at 39.74 against the dollar on Tuesday, unchanged from its previous close. TheState Bank of India (SBI)'s dollar-demand saw the rupee edge down to close at 39.76/77.

In early trades, the rupee was seen in the 39.74-39.75 range. The SBI entered the market soon thereafter and purchased spot dollars in small lots for most part of the day, dealers said.

A dealer with a European bank said that the SBI bid for the dollar at 39.75-39.76 levels. "Spot-dollar demand and dull supplies saw the rupee under some pressure," he said.

Corporate demand for the greenback was weak and most trades were inter-bank. The dollar's high for the day was 39.76/77 while its low was 39.74. Meanwhile, the Reserve Bank of India fixed its reference rate for the greenback at 39.74 as against its previous fix of 39.73.

FORECAST: The rupee is seen slightly lower at 39.78 levels on Wednesday.

Forward Premiums

Forwards closed stronger on Tuesday as rumours of an impending cash-reserve ratio (CRR) cut gripped the market. The six-month annualised forward cover gained to close at 6.13 per cent,compared with its previous close of 6.18 per cent. Inter-bank liquidity was expected to turn tight at the start of trades with the announcement of a six-year Rs 4,000-crore auction on May 8.

"Forwards were expected to go weaker on Tuesday," a dealer with a brokerage said. Later, the forward market cooled off as a CRR cut ahead of the May 8 auction gripped the dealing rooms. There was little importer or exporter demand for forward premiums. In near forwards, May dollars ended at 4/6 paise, June at 19/21 paise, July at 38/40 paise and August at 60/62 paise. In the long terms, January ended at 195/197 paise, February at 220/223 paise and March at 245/248 paise.

FORECAST: The six-month cover is seen at 6.11-6.12 per cent on Wednesday.

Gilts

The secondary market for government securities was subdued on Tuesday, but there were moderate enquiries for short-dated papers. Prices of government securities firmed up by 5-10 paise across the board on stray buying interest. The whole debt market ofthe NSE witnessed trading worth Rs 489.04 crore.

The 11.75 per cent government loan maturing in 2006 was traded at a weighted yield of 11.66 per cent for Rs 73 crore. The 12 per cent government paper maturing in 2008 was traded for Rs 65 crore at a weighted yield of 11.87per cent. The 11.15 per cent government paper maturing in 2002 was traded forRs 45 crore at a weighted yield of 10.90 per cent.

FORECAST: The secondary market for government securities is likely to be dull on Wednesday.