Call & Gilts

Sentiment : Cautious

* Call money closed around the repo rate of 5.75 per cent as liquidity in the banking system continues to be good.

* There were 17 bids worth Rs 21, 495 crore at today's repo auction, which were partially accepted for Rs 17,195 crore.

* Dollar sales by the Reserve Bank of India (RBI) sucked out some rupee funds, but it was not enough to push up the call rates.

* Government security prices remained range-bound ahead of the auction to be held in the first week of August.

* The RBI governor's comment on Monday that the bank rate cut and drought were not related issues continues to cloud sentiment.

* The mention of higher government spending in the supplementary budget also hit trend.

Outlook: Gilts are likely to remain range-bound on concerns about the upcoming auction. Call rates will be in a band of 5.60-5.80 per cent due to the liquidity comfort.

Forex

Sentiment : Cautious

* The forex arena turned volatile today as diamond importers chased dollars and state-owned banks, for a change, started selling greenbacks.

* The rupee touched a day's low of 48.78/79 due to the demand from the importers, who were stocking up ahead of the festive season.

* The greenback's rebound against other major currencies also led to the rupee's decline.

* Dollar supplies by state-owned banks was seen as back-handed intervention by the Reserve Bank of India (RBI). This helped the rupee recover to 48.68/69.

* Forward premiums remained little changed despite easy liquidity.

* Fears of cancellation of export contracts and the upcoming gilt auction put upward pressure on premiums.

Outlook: The rupee is likely to remain in a band of 48.65 to 48.75 thanks to the indirect intervention by the RBI. Premiums will stay range-bound on concerns about the gilt auction.