Call rates opened at 8.25 per cent on Monday compared with their previous close of 8 per cent. Overnight rates ruled in the 8-8.25 per cent band throughout the day and finally closed at the repo level of 8 per cent.

In the afternoon, the second tranche of Resurgent India Bond proceeds worth Rs 3,200 was disbursed to various collecting banks, which saw call rates ease to 8 per cent. "In the afternoon, most banks did not borrow as they had surplus funds," dealers said. Most banks preferred to remain liquid for the two-year paper auction, dealers said. The outflow through the Reserve Bank of India fixed-rate repos was to the tune of Rs 2,175 crore. An estimated Rs 8,500 crore in locked in repos. The NSE's Mibid and Mibor quoted at 8.05 and 8.23 per cent, respectively.

FORECAST: Call rates are seen at 8 per cent on Tuesday.

Gilts

The government securities market remained subdued on Monday as most market players did not actively trade in order to remain liquid for the two-yearpaper auction. The two two-year papers -- the 11.64 per cent 2000 and the zero coupon 2000 -- traded worth Rs 30-40 crore.

The 11.64 per cent 2000 paper quoted at Rs 100.48 (Rs 100.50) at a yield of 11.33 per cent whereas the zero coupon 2000 traded at Rs 82.05 (Rs 82.03), the 11.55 2001 paper at Rs 94 (Rs 93) and the 10.85 per cent 2001 at Rs 98.25. The two-year paper yield was 11.40 per cent, higher than market expectations. In the kerb market, some players quoted the new loan between Rs 100 and 110. The wholesale debt market of the NSE recorded trades worth Rs 139.83 crore. Repo trade worth Rs 18 crore was transacted at a repo rate of 9.10 per cent for 11 days.

FORECAST: Short-term gilt prices are expected to fall by 8-10 paise on Tuesday.

Spot rupee

The rupee weakened by 2 paise against the dollar on Monday owing to month-end dollar demand. The Indian currency opened at 42.53/54 and by mid-morning slid to the day's low of 42.54/55. The rupee ruled at these levels till the afternoon owingto dollar demand from corporates and banks to cover up their positions before the month-end and the forthcoming holidays.

However, in the afternoon, the rupee strengthened and partially recovered its morning loses on better dollar sales and lower demand -- after players had finished covering -- and finally closed at 42.51/52. Major market player State Bank of India was not active and indulged in nominal dollar buying, dealers said.

FORECAST: The dollar is seen at 42.50/54 on Tuesday.

Forwards Premium

Forwards premiums softened on Monday owing to better receiving and lower import bookings, dealers said. "As most of the players were through with covering, month-end demand tapered off. As a result, forwards opened on a stronger note on Monday," said a dealer from a private bank. The market was otherwise lacklustre, dealers said. The three months, six months and yearly premiums quoted slightly lower at 6.82 per cent (7.53 per cent), 7.69 per cent (8.01 per cent) and 8.54 per cent (8.76 per cent),respectively. The one month premium quoted at 6.3 per cent.

October premium quoted at 16-19 paise, November at 40-44 paise, December at 65-70 paise, January at 94-98 paise, February at 123-128 paise, March at 154-159 paise, April at 187-193 paise, May at 220-225 paise, June at 253-258 paise, July at 286-291 paise and August at 320-325 paise.

FORECAST: Forward premiums are expected to ease further on Tuesday.