Opening the day at 6-6.10 per cent levels compared to Friday's close of 4-5.50 per cent, call rates were seen in the range of 6.00-6.05 per cent for most of the day.

There was an outflow of nearly Rs 3,500 crore on account of three-day repos conducted by the Reserve Bank, but dealers said there was enough liquidity in the system to keep call rates at current levels.

Call rates touched an high of 6.5 per cent before touching a low of 5.95 per cent. Towards close of trades, overnight rates were seen around 6.25-6.50 per cent levels. "Trades were active," said a dealer at a European bank.

There was no panic in the inter-bank market on account of the nuclear explosions conducted on Tuesday, inter-bank dealers said.

Forecast: Call rates seen around 6.15-6.50 per cent levels on Wednesday.

Spot Dollar

The rupee remained steady and rangebound against the dollar on Tuesday inspite of a knee-jerck reaction from the importers after India conducted nuclear tests on Monday.It opened at 39.77, almost unchanged from its previous close of 39.78. Later it dipped to 39.78, which was also the dollar's high for the day. The SBI was seen selling dollars to protect it from sliding, dealers said. "There was a huge demand for dollar which was adequately met by the SBI," a dealer at a foreign bank said.

Had the SBI not intervened on behalf of the RBI to pump on dollars, the rupee might have touched 40, dealers said. Foreign banks were seen buying dollars on behalf of their clients, dealers said.

Towards the close, the rupee recovered to 39.77. The dollar's low for the day was 39.76.

FORECAST: The rupee is seen around 39.76-39.80 levels on Wednesday,if tough sanctions are not imposed.

Forward Premiums

The six-month annualised forward cover closed at 8.25 per cent on Tuesday, compared with its previous close of 6.80 per cent as importers covered fearing sanctions might hit the Indian economy. Sanctions are likely to be imposed after India conducted a nucleartest.

The SBI was seen receiving in the forward segment, dealers said. "They were there on behalf of the RBI," a dealer at a private bank said. According to him, sentiments in the foreign exchange market have turned bearish as players feel that inflows are likely to be affected due to the sanctions that are likely to be imposed.

According to dealers, if the sanctions are not hard, bullish sentiments will return as the forward rupee will no longer come under attack.

"We are all awaiting the type of sanctions and how hard India will be hit," a dealer at a private bank said.

FORECAST: The six-month cover is seen at 8-10 per cent levels.

Gilts

Prices of most securities fell by 60-100 paise in the government securities market on Tuesday. Dealers said that the market expected harsh sanctions from the international community after India conducted three nuclear tests.

"Foreign inflows are expected to dry up if sanctions are imposed. Therefore, foreign banks are selling securities," adealer in the debt market said.Among the securities in which prices fell were the 13.05 per cent gilt maturing in 2007 where the price fell by 70 paise, the 12 per cent 2008-- by 60 paise, the 11.5 per cent gilt maturing in 2004-- by 40 paise, the 14 per cent 2005 by 100 paise, and the 11.75 per cent 2006 by 55 paise.

FORECAST: Dealers expect the securities market to see bearish sentiments till a clearer picture emerges on sanctions.