Call rates continued to rule above the repo rate on Monday owing to outflow of advance tax and closed steady at 9-9.10 per cent.

Overnight rates opened slightly lower at 8.95-9.10 per cent, touched a high and low of 9.15 and 8.90 per cent, and closed at 9-9.10 per cent compared with their previous close of 9-9.25 per cent. The market witnessed slight tightening of liquidity as the outflow of advance tax continued, dealers said. Most transactions were made at 8.90-9 per cent, dealers said.

Call rates had started hovering above the benchmark repo rate of 8 per cent since last week. Major outflow is expected to occur this fortnight. As a result, banks are reported to be taking positions ahead of the fortnight's reporting Friday.

FORECAST: Call rates are seen around 9 per cent on Tuesday.

Spot Dollar

The rupee ended 1 paise lower against the dollar on Monday. The Indian currency opened at 42.55/56, came under pressure owing to corporate dollar demand and weakened to42.5550/5650. However, fresh dollar sales by banks and corporates at that level helped the rupee recover partially to close at 42.54/5450 compared with the previous close of 42.53/54.

The forex market witnessed good activity in the morning owing to some dollar demand, dealers said. "However dollar sales and little demand for the greenback in the afternoon saw the rupee recover to the previous day's closing level," a dealer with a private bank said. State Bank of India (SBI) was also seen quoting both ways, dealers added. Meanwhile, the Reserve Bank of India fixed the reference rate for the dollar at 42.55 (42.54).

FORECAST: The rupee is seen stable at 42.50-42.60 on Tuesday.

Forward Premiums

Forward premiums tracked the spot rupee on Monday. After moving up slightly in the morning on paying pressure, premiums came down later on better receiving and closed about 4 paise lower. "Forwards rose because the spot rupee came under pressure. As soon as the pressure on the spot rupee eased,forward premiums fell," a dealer with a private bank said.

The annualised premium for the first, third, sixth months and yearly quoted marginally lower at 5.47 per cent, 6.76 per cent, 7.42 per cent and 8.25 per cent respectively. Cash/spot and cash/tom closed at 1.00-1.25 paise and 0.25-0.50 paise premium respectively. The following were the month-wise premiums in paise: December 3-5, January 21-24, February 40-44, March 71-74, April 101-104, May 130-134, June 160-165, July 192-197, August 226-231, September 260-265, October 293-298 and November 325-330.

FORECAST: The six-month premium is seen at 7.30-7.50 per cent on Tuesday.

Gilts

The secondary market for government securities remained dull on Monday owing to lack of market-moving factors and prices were more or less steady. Volumes were at one of their lowest levels in recent times. Prices of short-dated papers, however, witnessed mild selling and eased by 1-3 paise.

The wholesale debt market of the National Stock Exchangewitnessed trades worth Rs 121.90 crore. The 11.40 per cent government security maturing in 2000 traded worth Rs 25 crore at a weighted yield of 11.31 per cent. The zero coupon government stock maturing in 2000 (series III) traded worth Rs 30 crore at a weighted yield of 11.33 per cent. Commercial papers of IPCL and Kodak maturing on February 4, 1999, traded worth Rs 5 crore each at a yield of 10.25 per cent.

FORECAST: Gilts market may witness subdued trading on Tuesday.