Government security prices closed today around the same level as the Saturday’s closing level in a very thin market. Call rates, on the back of easy liquidity, remained in the 6.40-6.70 per cent band throughout the day.

A dealer with a private sector bank said, “Ample liquidity was the reason for prices moving up in the morning. But, with prices being already high and nearing their historic highs, profit-booking took place and the prices ended little changed from the previous week’s close.” In the call money market, there was little demand for funds. Overnight rates were stable in the range of 6.40-6.70 per cent throughout the day.

A primary dealer said, “As the major part of the advance tax outflow is already back in the banking system because of government spending, banks are flushed with liquidity and hence there was not much demand.”

Ample liquidity condition was reflected in the liquidity adjustment facility auction as well. The Reserve Bank of India (RBI) received five bids of Rs 10,465 crore — highest in the last one month. The central bank accepted all the bids at a cut-off rate of 6.50 per cent.

Trading volume is likely to remain dull in the government security market tomorrow. However, there may be some buying interest at the medium end of the market, dealers said.

The treasury head of a new private sector bank said, “Gilts will remain upward-biased, but the market participants will remain cautious as the prices are already too high.” In the call money market, rates will remain soft and hover around the refinance rate of 6.50 per cent.