The call money rates, on Monday, hovered hugging the repo rate of 8 per cent and closed unchanged from Saturday's close 8.00-8.05 per cent. The rates opened marginally higher at 8.00-8.10 per cent against the previous close of 8.00-8.05 per cent, and continued to be at 8 per cent to subsequently close at 8.00-8.05.

"The market was very quiet with enough liquidity to match any demand. All eyes are the auction", dealers said. There was a repo outflow of around Rs 150 crores today.

The DFHI extended a market support of Rs 2300 crores in the system today. The NSE Mibid rates of overnight, 14-day, one month and three month were quoted at 8.00 per cent, 8.38 per cent, 9.04 per cent and 10.03 per cent respectively. The NSE Mibor rates for the above categories were quoted at 8.08, 8.86, 9.76 and 10.84 per cent respectively.

FORECAST: Call rates are likely to hover at 8-8.20 per cent levels on Tuesday.

Spot Dollar

The forex market witnessed dull trading on Monday with therupee quoting between 42.55 and 42.58 against the dollar. The Indian currency opened the day at 42.55/56, little changed from its previous close. Poor corporate demand for the dollar saw the rupee hold steady.

"State-run banks stayed away. Most dealers are off on year-end holidays... The forex market also feels that chances of an immediate realignment of political forces at the centre are not on." At the close of trades, the rupee was seen at 42.57/58.

State-run banks remained absent throughout the day, while there was not much dollar demand from corporates, dealers said. Cash/spot quoted at 0.50/0.75 paise and cash/tom at 0.25/0.50 paise. Elsewhere, the Reserve Bank of India pegged its reference rate for the dollar at 42.57, three paise lower than its previous fix of 42.54.

FORECAST: The rupee is seen in the 42.53-42.58 band on Tuesday.

Forward Premiums

Forward premiums held firm on Monday, tracking a steady spot rupee. "Poor corporate demand for forward dollars continued throughoutthe day... There were few trades," dealers said, citing year-end as a reason.

The six-month annualised forward cover closed at 7.55 per cent compared with its previous close of 7.57 per cent. "Call rates too hovered around the repo rate of 8 per cent after opening slightly higher... helping premiums hold their levels. The political chaos is likely to continue for some time, and has been discounted by the market," a dealer with a brokerage said.

In the near terms, February quoted at 56/59 paise, March 86/88 paise and April 119/121 paise. In the far forwards, June was seen at 182/184 paise, July 215/217 paise and August 250/253 paise.

FORECAST: The six-month annualised cover is seen at 7.50-7.55 per cent on Tuesday.

Gilts

The debt market saw hectic activity on Monday ahead of the auction of the Rs 1,500 crore three year paper. The paper is likely to see a coupon of 11.50 per cent with no devolvement.

Dealers said that the prices of the medium term securities went up by 5-7 paise aseven the high coupon stocks which are generally not traded saw activity. Dealers said that commercial papers were also traded actively in the debt market.

Among the stocks that were actively traded was the 12 per cent 1999 stock, the 13.70%, 1999, 11.40% 2000, 11.55% 2000, 11.55% 2001, 11.75% 2001, 13.75% 2001 and 13.85 % 2001. Stocks maturing in 2002 were also actively traded. According to dealers the turnover at the wholesale debt market segment touched 600 crore in trades.

FORECAST: Activity is likely to be fairly moderate as liquidity is quite good.