Moderate trading interest was reported in the Government of India dated securities. However, banks did not pick up assets in large quantities as an outflow on account of advance taxes, estimated at Rs 2,500 crore, is expected after September 15.
Dealers in the money market said several foreign banks prefer to move out of securities having a shorter maturity and are instead opting for the 91-day paper at the primary auctions.
A dealer in one of the foreign banks added that the yield on the 3-month paper at the auction varied between 9.5 and 9.75 per cent. "A few banks are, therefore, selling the 15-day/1-month paper at a yield of 5.5 per cent to 7 per cent and buying a fresh paper from the primary auction," he said. The banks doing this are those which have a cash surplus and would have lent out these funds in the call market in the normal course of events.
The extent of banks' participation at the auction will depend on the kind of view they take on the future direction of the call rates. "It is likely that rates in the market will remain low for some time," said a dealer.
The 13.5-per cent 1998 security was traded at a price of Rs 101.20, zero-coupon 1999 at Rs 72.58, 13.62-per cent 1998 gilt at Rs 100.50. The treasury bills were reported to have been traded at yields ranging from 5.75 per cent to 6.25 per cent. The T-bill maturing on September 7 was traded at 5.75 per cent, while the one maturing on September 14 was transacted at 6.25 per cent.
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