Call Rates Grooved, Auction Hangover Skins Gilts

Call money rates were in a tight range of 6.90-7.05 per cent today on the back of comfortable liquidity in the system, while the prices of long-term government securities fell by 5-10 paise.

Call rates opened in the 6.90-7.05 per cent range and stayed in that band throughout the day. A dealer with a private sector bank said, "Volumes were very low as most of the participants are flushed with liquidity. The overnight rates were below the refinance rate of 7 per cent for most of the time."

The Reserve Bank of India did not receive any bid to for one-day repo and reverse repo auctions. The prices of long-term government securities fell marginally amid very low volumes. According to dealers, the huge supply of fresh government securities through auctions and the sharp fall of the yields caused a nervous situation.

The treasury head of a private sector bank said, "There is no appetite in the market and players feel that the yields can only go up. In a situation like this, nobody was interested in taking fresh positions."

Call money rates are expected to remain in the range of 6.75-7 per cent tomorrow. A senior dealer said, "There is little demand for the overnight money and some players have already covered their positions for the fortnight. Hence the demand will be very low in the market."

The prices of government securities are expected to move in the range of 10-15 paise. The treasury head of a private sector bank said, "We do not see much improvement in the securities market. The prices may go up initially, but will come down due to the profit-booking."