The government securities market witnessed lacklustre trades on Friday. Short-dated gilt prices fell by 2-3 paise. "The market saw selling pressure in short-term gilts on market perception that the interest rates would rise," dealers said.

Trades were recorded in short-dated gilts like the 11.55 per cent 2003 paper, the 11.50 per cent 2004 paper and the 13.75 per cent 2001 paper. The 11.55 per cent 2003 paper traded at Rs 90 (Rs 94-95), the 11.50 per cent 2004 paper at Rs 98 and the 11.75 per cent 2001 paper at Rs 100.35-100.37. The wholesale debt market of the NSE registered trades worth Rs 300.72 crore. The 12.30 per cent government loan maturing in 1998 was traded worth Rs 40 crore at a weighted yield of 10.45 per cent.

FORECAST: Short-term gilt prices are expected to rule at Friday's levels on Saturday.

Call Money

The overnight rates opened at 3-4 per cent on the reporting Friday owing to lack of demand for funds. The call rates edged up to 5-7 per cent in later trades. Therates rose further towards the close to finally settle at 9.50 per cent owing to some demand for funds, dealers said. The outflow from the system on Friday was Rs 1,380 crore while the inflow through repo reversal was Rs 1,400 crore.

The call rates are expected to tighten next week as an estimated Rs 5,000 crore outflow is expected through advance-tax payment.

The STCI's turnover was Rs 800 crore on a weighted average of 8 per cent. The NSE's Mibid and Mibor quoted at 5.24 per cent and 6.55 per cent respectively.

FORECAST: The call rates are seen in the 7-8 per cent band on Saturday.

Spot-Dollar

The spot rupee opened at 42.46/47 against the dollar on Friday compared with its previous close of 42.45/48. The Indian currency appreciated during the day to 42.45 as most local banks were seen selling dollars. "However, the situation changed in the afternoon owing to dollar-demand from foreign banks," dealers said. Additional dollar-demand in the late afternoon from a few foreign banks and StateBank of India saw the rupee weaken against the dollar. "SBI's entry resulted in a spurt in the demand for dollars, which led to a weakening of the rupee to 42.49/50 towards the close," dealers said.

FORECAST: The rupee is seen between 42.48 and 42.55 on Saturday.

Forwards Premiums

Near-term forward premiums fell by 1-2 paise while long-term ones fell by 3-4 paise on Friday morning, when the rupee touched 42.45/48 against the dollar. "Importers rushed to cover after premiums fell," a dealer said. However, premiums rose in the afternoon after the rupee weakened to 42.49/50. The six-month annualised premium closed at 8.75 per cent (8.30 per cent), three months at 8.31 (7.6 per cent) and one month at 7.80 per cent (7.58 per cent). The September premium closed at 12/15 paise (12/14 paise), October at 39/43 paise (40/43 paise), November at 70/73 paise (70/75 paise), December at 100/105 paise (98/102 paise), January at 131/136 paise (130/135 paise), February at 162/167 paise (161/166 paise), March at196/201 paise (194/199 paise), April at 231/236 paise (230/235 paise), May at 265/270 paise (263/268 paise), June at 300/305 paise (297/302 paise), July at 334/339 paise (331/336 paise) and August at 367/373 paise (265/272 paise).

FORECAST: The six-month annualised forward premium is seen at 8.70-8.75 per cent on Saturday.