Call Hovers Around 7%, Gilts Look Up

Call rates stayed in the 6.80-7.15 per cent range today on the back of easy liquidity. Government security prices jumped by 10-15 paise at the medium to long end owing to steady call rates.

Call rates opened in the 7-7.15 per cent band, but fell during the day. Dealers said that most of the deals were done in the 7-7.10 per cent band.

A dealer with a private sector bank said, "There was enough liquidity in the system especially with the state-run banks. This kept the overnight rates in yesterday's range."

The Reserve Bank of India (RBI) received a single bid of Rs 1,500 crore at the three-day repo auction which the apex bank accepted at a cut-off rate of 6.50 per cent. The central bank, however, did not receive any bids at its three-day reverse repo auction.

Low call rates and ample liquidity in the system, however, failed to boost the sentiment in the government securities market.

According to dealers, the market is expecting an auction announcement shortly which kept the sentiment down. The treasury head at a private sector bank said, "The market is expecting an auction of at least Rs 5,000 crore next week. Though this will be a minuscule amount as far as the liquidity in the system is concerned, the market is concerned about the maturity period of the new issue."

Call rates are expected to remain around seven per cent tomorrow due to the comfortable liquidity situation. A senior dealer said, "We do not expect any attack on the market liquidity and hence the call rates are expected to remain range-bound."

Government security prices may go up by 10-15 paise at the short and medium end.