Trading in the call money and government securities markets was dull today due to heavy rains. Call rates stayed in the 6.75-7 per cent range, while government security prices dipped marginally due to the outflow of Rs 7,000 crore on account of Saturday's twin auction.
Call rates opened in the 6.95-7 per cent band in the morning and remained there for most of the time. They dipped towards the close of the day and settled in the 6.75-6.85 per cent range. Dealers said some stray deals were even done at the 6.50 per cent level.
"Some mutual funds came to the market at the late hours of the day, but did not find enough borrowers, which pushed the rates down to the repo rate," a dealer with a private sector bank said.
The Reserve Bank of India (RBI) received two bids of Rs 3,600 crore for its one-day repo auction. The central bank accepted both the bids at a cut-off rate of 6.50 per cent. However, it did not receive any bid for the one-day reverse repo auction.
Government security prices fell by 5-10 paise amidst thin trading. Dealers attributed the fall to the auction outflow.
"There were very few deals in the market and today's phenomenon does not give any indication to the sentiment of the market. However, the only reason behind the fall can be the auction outflow," a senior dealer said.
Overnight rates are expected to remain below the seven per cent level tomorrow. Dealers said there was ample liquidity and the demand was expected to stay thin as most of the players had covered their positions in the last week itself.
Gilt prices are expected to rise by 15-20 paise, followed by profit-booking. "Though there is enough liquidity, since prices have already reached the extreme any further rally will result in profit-booking," a dealer with a nationalised bank said.