Easy conditions prevailed at the overnight call money market here on Monday on account of ample liquidity in the system.

Call rates opened around 8.10 per cent but later eased to 7.90-8.00 per cent at the close of the trade with most of the transactions done in the region of 8.05-8.10 per cent. Dealers said that inflows on account of reversal of repos led to a comfortable liquidity situation."Good inflows through reversal of earlier repos increased fund supply and was more than enough to meet the demand of borrowers," dealers said.

The Reserve Bank of India (RBI) received Rs 3,752 crore at the 3-day 8.00 per cent fixed rate repos auction held here today.

"There was moderate activity as call rates moved in a very narrow groove", a dealer at a private bank said. As a result the secondary market for securities remained quiet.

FORECAST: Overnight call rates are expected to remain the same levels on Tuesday.

Spot Dollar

The news of easing the US sanctions saw theIndian rupee strengthen by 8 paise against its previous close. The Indian currency opened at an intra-day high of 42.20/24 against dollar against the previous close of 42.29/30.

"The market was expecting huge supply of dollar that did not take place resulting in the weakening of the rupee by one paise," forex dealers said.

The Indian currency weakened to 42.25/26 against dollar as neither banks or exporters entered the market to sell at these levels. According to forex dealers, State Bank of India entered the market at noon and bought dollar which saw the Indian currency slipping further to 42.28/29 against dollar. "Some foreign banks were also buying on behalf of corporates," said a dealer at a foreign bank.

FORECASt: The rupee is seen in a band of 42.28-38 on Tuesday.

Forward Premiums

The forward premium across all maturities moved in a narrow 1-3 paise range on Tuesday. The nar-end forward premium softened by 1 paise and far-end fell by 1-3 paise compared with their previousclose. The six-month premiums opened unchanged from their previous close and closed at 141-144 paise. The six-months annualised premium closed at 7.5 per cent, three-months at 6.35 per cent and one-month at 5.35 per cent.

The November premium quoted at 8-9 paise (8-9 paise), December at 26-28 paise (28-31 paise), January at 52-54 paise (54-58 paise), February at 80-82 paise, (81-85 paise), March at 110-114 paise (111-114 paise), April at 141-144 paise (141-145 paise), May at 172-174 paise (171-174 paise), June at 200-203 paise (201-204 paise) July at 230-234 paise (231-236 paise), August at 260-264 paise (263-268 paise).

FORECAST: The six-month annualised premium is seen between 7.4-7.6 per cent on Tuesday.

Gilts

The secondary market saw very low key trading on Tuesday with most of the action being concentrated in the medium and short-term securities. Dealers said the new sale list put out by the RBI did not evoke much interest among banks. "The RBI in the past three days has mopped upmore than Rs 2,000 crore through OMOs," a dealer said.

"The secondary market for securities remained quiet in the absence of fresh market-moving factors, but short-dated papers encountered mild profit-selling," a dealer said. At the wholesale debt market segment of the NSE, the 11.98 per cent government loan maturing in 2004 was traded for Rs 75 crore at a weighted yield of 12 per cent. The 11.55 per cent government loan maturing in 2001 was traded for Rs 40 crore at a weighted yield of 11.47 per cent. Commercial papers of various firms were also traded for Rs 36 crore at yields varying between 10.50 per cent to 11 per cent.

FORECAST: Buying interest will continue in short-dated securities.