Call Hover Around 6.5%, Gilts Look Up

Call rates ruled in the 6.5-7 per cent range today on the back of easy liquidity condition and thin demand on the reporting Friday. Government security prices went up by 25-30 paise due to easy call rates.

Overnight rates opened in the 6.75-7 per cent band and dipped gradually to close around 6.50-6.60 per cent.

A dealer said: "Almost all the players have covered their positions and there were no borrowers in the market. This helped the overnight rates to settle down at the repo rate of 6.50 per cent." Dealers said that most of the deals were done in the 6.65-6.75 per cent region.

The Reserve Bank of India did not receive any bids at the one-day repo as well as reverse repo auctions. According to dealers, lenders were reluctant to take fresh positions on the reporting Friday.

Prices in the government securities market continued to recover as prices across the board went up by 25-30 paise.

The treasury head at a private sector bank said, "Prices fell sharply after the downgrading of the country's sovereign rating by international ratings agencies without any fundamental reason. Prices have been recovering since then and at present the sentiment in the market is improving."

Call rates are expected to come down and remain below the refinance rate of seven per cent tomorrow though demand on the first day of the reporting fortnight will be high.

The treasury head at a private sector bank said, "There will be higher demand in the market but it will be matched with ample liquidity in the system and hence the rates are likely to remain below seven per cent."

Government security prices are expected to jump by another 10-15 paise on the back of easy liquidity and lower call rates.