CALL MONEY
Call rates ended slightly higher on Wednesday amid demand towards the close to cover gaps in CRR requirements. The overnight rates opened at 6.90-7.05% as against Tuesday's close of 6.75-7%. Dealers said liquidity was comfortable and inflows of about Rs 600 crore on Thursday should keep call rates around the RIB refinance rate of 7 per cent. "There were enough supplies in the market. A last minute covering by some banks, ahead of the reporting Friday, pushed call rates slightly above 7 per cent," a private bank dealer said. Dealers said fresh outflows towards the open market sales will not affect liquidity as the market is flush with funds from bond redemptions and coupon flows of Rs 4,500 crore this week. Call rates ended at 6.95-7.05% cent. The RBI placed the 11-year bond and 364-day T- bills for open market sales, and dealers expect the RBI will receive subscription between Rs 1,500-2,000 crore. The RBI collected Rs 496 crore on Tuesday.
FORECAST: Call money rates around 7 per cent on Thursday.SPOT DOLLAR
The rupee hit a new closing low on Wednesday in a cool trading session that was less volatile than the past few days. The rupee opened at 44.555/57 as against Tuesday's close of 44.565/575. Volumes were also lower though the anticipated export sales did not emerge and there was import demand from several small corporates. Dealers said the market had opened Wednesday on a bullish note after Tuesday's halt in the rupee's weakening and buoyancy in regional markets. The rupee's slide on Tuesday had been stemmed by the State Bank of India's (SBI) constant supply of dollars, despite widespread import demand. The rupee ended at 44.5725/58 per dollar, dipping from intra-day highs of 44.52. Cash/spot ended at 0.00/0.25 paise, while tom/spot and cash/tom closed 0.00/0.125 paise. The RBI maintained its reference rate for the US dollar at 44.58.
FORECAST: The rupee seen lower in case of heavy dollar demand on Thursday.
FORWARD PREMIUMS
Forward premiums ended lower on good receivings by banks across all maturities on Wednesday. Dealers said the forward market reflected the abating bearishness on the rupee and the easier liquidity outlook. "There was heavy receiving in the three and six month maturities," a dealer said. The six-month premium ended at an annualised 2.49 per cent compared with Tuesday's 2.63 per cent. Call rates ended around the refinance levels of 7 per cent. Dealers said inflows to the tune of Rs 4,500 crore from bond redemptions and coupon payments kept the liquidity in the money market easy. "As a result, the premiums ruled lower," a dealer with a forex brokerage said. June dollars ended at 5/6 paise, July at 24/25 paise, while in the far end December closed at 64/65 paise and January at 76/77 paise.
FORECAST: Premiums seen lower on Thursday.
GILTS
Bond prices ended higher on Wednesday as banks, flush with liquidity from inflows this week, picked bargains across maturities. Prices of short and medium tenor securities rose 10-12 paise. The 11.55 per cent 2001 bond ended at Rs 102.11, up from morning levels of Rs 102.10 compared to Rs 102.02/03 on Tuesday evening. The 11.68 per cent 2006 bond ended higher at Rs 106.80 as against Tuesday's Rs 106.65. Dealers said bond prices will stay firm as worries over the weakening rupee had abated and fund supplies were easy ease in the money market. Long dated securities were also bid higher, but dealers said there were no deals reported. The RBI has placed the 10.95 per cent 2011 bond for open market sale at Rs 100.05 as against Rs 100 on Tuesday.
FORECAST: Bond prices seen higher on Thursday.
-- Compiled by Anurag Joshi
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