Call rates ruled a tad easier on Tuesday. Overnight rates opened at 8-8.10 per cent and remained at this level for most part of the day. The rates eased marginally towards the close to 7.90-8 per cent owing to lower demand for funds.

There was sufficient liquidity in the market and the rates moved in a narrow range between 7.90 per cent and 8.10 per cent, dealers said. Outflow on account of repos was Rs 395 crore. The DFHI extended market support of Rs 2,300 crore. Meanwhile, the NSE Mibid rates for overnight, 14 day, one month and three months quoted at 8.01 per cent, 8.40 per cent, 9 per cent and 10.08 per cent respectively. The NSE Mibor rates for the same categories were 8.07 per cent, 8.87 per cent, 9.65 per cent and 10.82 per cent respectively.

FORECAST: Call rates are seen at 7.90-8.10 per cent on Wednesday.

Debt market

Prices of three-year government securities crashed by 7-8 paise on Tuesday. "Prices have fallen across all maturities as there was a fair amountof profit-taking," a dealer from a brokerage house said.

Price of the 11.55 per cent gilt maturing in 2001, which traded at Rs 100.21/22 in the morning, witnessed a 7 paise fall towards the close. The 11.40 per cent gilt maturing in 2002 also traded lower at Rs 100.10 at the close. The newly issued 11.47 per cent gilt maturing in 2001 was not traded. The other stocks included the zero coupon security maturing in 1999, the 12 per cent gilt maturing in 1999 and the zero coupon security maturing in 2000.

FORECAST: The gilts market may see dull trading expected on Wednesday.

Spot Dollar

The rupee held steady against the dollar on Tuesday as the forex market witnessed dull trading. The Indian currency opened at 42.58/59 and touched an intra-day low of 42.59/60. The rupee however gained later to close at 42.56/57. "The rupee came under mild pressure in the morning owing to a little corporate demand for dollars, but fresh dollar sales helped the rupee recover," dealers said.

Cash/spot quoted at0.75/1 paise (0.50/0.75 paise) and cash/tom quoted unchanged from its previous fix of 0.25/0.50 paise. "Market-mover State Bank of India and other state-run banks were absent," a dealer with a brokerage said. Elsewhere, the Reserve Bank of India pegged its reference rate for the dollar at Rs 42.59, two paise lower than its previous fix of Rs 42.57.

FORECAST: The rupee is seen in the 42.54-42.60 band on Wednesday.

Forward Premiums

Forward premiums held steady on Tuesday as the spot rupee was firm. "Forwards weakened in early trading with the spot rupee touching a low of 42.60. Nominal paying pressure was seen in forwards. Premiums were more or less near their previous closing levels," a dealer with a brokerage said.

The six-month annualised forward cover quoted at 7.49 per cent compared with its previous close of 7.57 per cent. In the near term, February quoted at 53/56 paise (56/59 paise), March 83/86 paise (86/88 paise) and April 116/120 paise (119/121 paise). In the far term, June was seen at178/182 paise (182/184 paise), July 211/216 paise (215/217 paise) and August 245/250 paise (250/253 paise).

FORECAST: The six-month annualised cover is seen at 7.60-7.77 per cent on Wednesday.