The government securities market on Tuesday witnessed active trades in the 11.98 per cent 2004 and 12.25 per cent 2008 papers. Nationalised banks and a few foreign banks showed buying interest in these new gilts, which traded at par in the secondary market, sources said. "Trading was confined to these papers," dealers said.

Most primary dealers were seen selling the six- and 10-year papers.

The high coupon fixed by the Reserve Bank of India on the six-year paper is likely to lead to a fall in the prices of short- and medium-term papers below six-year maturities. The wholesale debt market of the NSE witnessed trades worth Rs 141.78 crore.

Forecast: Short-term gilt prices are expected to fall by 3-5 paise on Wednesday.

Call Money

The call rates opened at 9.25 per cent on Tuesday compared with their previous close of 8.75 per cent. The overnight rates ruled at the opening level throughout the morning as a few traditional lenders were absent.

But in the afternoon, therates eased to 8.50-8.75 per cent on dearth of borrowers, to finally close at 8.25-8.30 per cent. "Liquidity is confined in the hands of only a few lenders, which is evident from the fact that the Reserve Bank of India received only one application worth Rs 1,400 crore for its three-day 8 per cent fixed-rate repos," dealers said. The inflow into the system on Tuesday through repo reversal was Rs 2,400 crore. The call rates are expected to tighten after September 15 as around Rs 5,000 crore is expected to flow out of the system through advance tax payment.

Forecast: The call rates are seen in the 8.50-9.25 per cent band on Wednesday.

Spot Dollar

The forex market remained rangebound on Tuesday. The rupee opened at 42.55/56 against the dollar, unchanged from its previous close. But in the afternoon, the rupee weakened to 42.56/57 owing to demand from local banks and corporates.

Most local banks and corporates received in the forwards, which led to the weakening of the spot rupee, dealerssaid. "Most banks and corporates sold in forwards, which pushed the forward premiums down by 4-5 paise across all maturities. This had an impact on the spot rupee," dealers said. The rupee finally closed at 42.55/56.

Forecast: The rupee is seen between 42.53 and 42.58 on Wednesday.

Forwards Premiums

Hectic swap deals by local banks on behalf of their corporate clients led to a fall in forward premiums across all maturities by 2-3 paise on Tuesday. "Most local banks received in the forwards, which pushed down forward premiums," sources said.

The six-month annualised premium closed at 8.60 per cent (8.75 per cent), three-month annualised at 8.2 per cent (8.6 per cent) and one-month annualised at 7.6 per cent (8.06 per cent). The September premium closed at 15/17 paise (16/18 paise), October at 45/48 paise (47/50 paise), November at 77/79 paise (79/80 paise), December at 109/111 paise (111/113 paise), January at 143/145 paise, March at 205/207 paise (207/209 paise), April at 243/245 paise(245/247 paise), May at 279/281 (278/282 paise), June at 315/317 paise (316/318 paise), July at 351/353 paise (352/354 paise) and August at 383/386 paise (384/387).

Forecast : The six-month annualised forward premium is seen at 8.60-8.65 per cent on Wednesday.