Call Rates Ranged, Gilt Prices Steady

Call rates stayed in a narrow range of 6.70-6.85 per cent today on the back of ample liquidity and low demand in the overnight market.

Government security prices remained steady amidst lacklustre trading. Prices moved by 5-10 paise across all the maturities.

Call rates opened in the 6.70-6.85 cent band and stayed there throughout the day. A dealer said: "The liquidity condition has turned good since the beginning of the current financial year which prompted the market participants to cover most of their positions for the fortnight in the first three days. Hence, there was little demand for call money today which made the call rates to remain in a tight range."

Dealers also said that as there was no buying interest in government securities, there was a liquidity overhang in the system as well.

The ample liquidity situation was reflected at the liquidity adjustment facility auction as well.

The Reserve Bank of India (RBI) received two bids worth Rs 5,005 crore at the one-day repo auction which the apex bank accepted at a cut-off rate of 6.50 per cent. The central bank did not receive any bid at the one-day reverse repo auction.

Government security prices remained range-bound throughout the day amidst lacklustre activity.

There was no buying interest as the players were expecting an auction announcement from the RBI.

The possibility of an auction arises out of the high ways and means advances figure which stayed over the Rs 10,000 crore mark.

"There may be short rally after the auction," dealers added. Dealers also pointed out that gilt prices have reached the maximum possible levels and hence are staying around that level.

Call rates may remain in the 6.60-6.80 per cent band tomorrow as the liquidity condition is likely to remain unchanged.

Government security prices are expected to witness a 10-15 paise variation from their current levels.