Call rates eased by 125 basis points towards the close on Tuesday as the Reserve Bank of India refunded the oversubscription to the tune of Rs 1,204.95 crore received during the 10-year state loan auction. "The Rs 1,204.95 crore which entered the system in the afternoon eased call rates to 8.50 per cent," dealers said. Call rates opened at 9.40 per cent compared with their previous close of 9.75 per cent. However, overnight rates eased below the 9 per cent mark to finally settle at 8.50 per cent as the oversubscription received for the state loan was routed back into the system. The Reserve Bank of India received and accepted three applications worth Rs 180 crore for its three-day fixed-rate repos for parties holding SGL and current accounts. According to dealers, call rates are expected to rule at 8-9 per cent throughout the week as no major outflow is expected during this period.

FORECAST: Call rates are seen at 8.50-9.25 per cent on Wednesday.

Spot Dollar

The rupeemoved in a narrow 2 paise range on Tuesday. The Indian currency opened at 42.53/54 against the dollar, 2 paise weaker than its previous close of 42.51/52. The rupee moved in a narrow tight band of 42.52/54 owing to lacklustre demand for funds. "The supply also remained stable throughout the day," a dealer said. The State Bank of India did not actively trade in the forex market. The rupee finally closed at 42.53.50/54.50. According to dealers, the rupee is expected to rule at 42.50/60 this week as importers are keeping away from the market. The Reserve Bank of India reference rate for the dollar was Rs 42.53 (Rs 42.52).

FORECAST: The rupee is seen between 42.50 and 42.60 on Wednesday.

Forward premiums

Forward premiums eased by 3-5 paise on Tuesday owing to marginal receiving by exporters. The six-month annualised cover closed at 7.3 per cent (7.45 per cent), three months at 5.9 per cent (6.3 per cent) and one month at 5.05 per cent (5.36 per cent). The January premium closed at 13-16 paise(19-20 paise), February at 33-37 paise (39-40 paise), March at 58-63 paise (66-68 paise), April at 89-94 paise (97-99 paise), May at 119-123 paise (126-129 paise), June at 148-152 paise (156-158 paise), July at 178-183 paise (188-191 paise), August at 210-213 paise (215-219 paise), September at 246-251 paise (254-257 paise), October at 278-283 paise (287-289 paise), November at 308-311 paise (315-321 paise) and December at 342-345 paise.

FORECAST: The six-month annualised premium is seen at 7.4-7.8 per cent on Wednesday.

Gilts

Prices of short-term government securities firmed up by 2-3 paise on Tuesday as the oversubscription received for the 10-year state loan paper came back into the system. A high amount of selling pressure was seen in the market after call rates eased to 8.50 per cent. The zero coupon 1999 paper quoted at Rs 100.41 against the previous close of Rs 100.39. The 11.40 per cent 2000 paper quoted at Rs 100.11 (Rs 100.08) and the 11.55 per cent 2001 paper at Rs 100.10 (Rs100.07). The wholesale debt market of the NSE witnessed trades worth Rs 405.24 crore. The 11.40 per cent government loan maturing in 2000 traded at a yield of 11.31 per cent. The 12 per cent converted stock maturing in 1999 traded worth Rs 40 crore at a weighted yield of 10.26 per cent.

FORECAST: Gilt prices are seen stable on Wednesday.