Financial Express: Market Round-up

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Market Round-up

FE NEWS SERVICE

CALL RATES: Call rates opened sharply higher at 35-40 per cent from their previous finish at 10 per cent levels.

Bid/ask quotes were ranged wide between 14 per cent and 30 per cent in early morning trades. A few banks, mainly foreign and private-owned, were seen borrowing heavily on account of the two holidays ahead on the reporting Friday on the 28 of this month. Overnight rates softened later during the day to finally close at 11 per cent levels.

"The Reserve Bank's decision to hike the cash reserve ratio to 11 per cent and repos rate to 8 per cent on Thursday affected sentiment", dealers said. The Reserve Bank mopped up Rs 2,860 crore through a three-day fixed rate repo at 8 per cent, receiving two applications and accepting both.

FORECAST:Call rates seen hovering between 10 per cent and 12 per cent on Monday.

GILTS: Gilt prices fell on opening, but recovered by close on Friday. Higher call rates between 35 per cent and 40 per cent, as a result of Reserve Bank's tight money measures on Thursday, saw banks selling gilts to create liquidity. By noon, security prices fell by 20 paise to 30 paise, but gained towards close.

"Active trades were witnessed in the short-term 11.55 per cent 2001 security and 11.75 per cent 2001 security. The 11.55 per cent 2001 stock recovered to trade between Rs 99.25 and Rs 99.50, up from Thursday's finish at Rs 99, dealers said.

The National Stock Exchange wholesale debt segment witnessed trades worth Rs 319.80 crore, lower from the previous day's trades worth Rs 336.25 crore.

The 11.75 per cent 2001 stock saw trades worth Rs 77 crore at a weighted yield of 11.99 per cent. Reliance Industries commercial paper maturing on September 14, 1998 saw trades worth Rs 35 crore at a weighted yield of 12.36 per cent.

FORECAST:Gilt prices seen opening on Monday at Friday's closing level.

Spot Dollar

The rupee, on Friday, continued to recover for the second consecutive day to close at 42.55/58 after opening at 42.80/85. The rupee had touched a new low of 43.70 on Thursday after which the RBI announced a series of measures to rein in the rupee. "Sentiments continued to be nervous but a lot of exporters were selling and there was a fair amount of importer cancellations which saw the rupee appreciate," a dealer in a private sector bank said. Dealers said that some exporters were selling as they found it be attractive. "The market is still reeling under Thursday's onslaught by the Reserve Bank. Although the sentiments haven't much changed, there is slight movement towards bullishness on the rupee", a dealer in a foreign bank said. The Reserve Bank was not present in the spot market but conducted swaps for September maturities.

FORECAST: The rupee is likely to stay at 42.50/43.0 on Monday.

FORWARD PREMIUMS:

The one-month forward premiums touched a high of 20 per cent up from 19.04 per cent on Friday in the aftermath of the RBI announcement of a series of measures to tighten short-term liquidity to bring the rupee under control. The RBI along with the SBI also paid in the forward market for September maturities. Dealers said that the cash/spot premia rose to as high as 30 per cent. "A lot of banks which were receiving have now started to pay which is driving the forward rates up", a dealer in a private bank said. The six- month forward premiums (annualised) inched up to close at 12.55 per cent (12.43 per cent) and the one-year closed at 12.26 per cent (11.5 per cent).

FORECAST: The six-month forwards are likely to remain in the 12-13 per cent range on Monday.

Net Express

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