MONEY MARKET
The call rates are expected to rule in a band of five to six per cent as the liquidity in the inter bank call money market is expected to persist in this week.
In keeping with the trend, the repo auctions are expected to influence the movement of the interest rates in the call money market.
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In the repo auctions held on Saturday, the Reserve Bank of India (RBI) accepted eight bids aggregating Rs 1440 crore.
The cut off repo rate was 4.98 per cent.
With the call money rates moving up and the possibility of arbitrage reduced, there is not expected to be much activity in the treasury bills' segment.
In fact, in the last auction of 91-day treasury bills, where the cut off yield was fixed at 7.97 per cent, there was devolvement on the Reserve Bank of India to the extent of Rs 11.73 crore and on the primary dealers to the extent of Rs 1.85 crore.
As part of its open market operations, the central bank announced a revised price list. The Reserve Bank of India has put out the 13.65 per cent 1999, 13.85 per cent 2001, the 14 per cent 2006 and the 12 per cent 2011 in the sale list.
In comparison with the earlier price list announced on February 7, 1997, the Reserve Bank of India has brought down the purchase price of the Gold Bonds 1998 from Rs 4108.55 to Rs 3960.06 per 10 grams.
The catalyst in the securities market last week was the recently auctioned ten-year paper.
The paper which was auctioned at a yield of 13.65 per cent was commanding a premium in the region of 30 paise. Consequently the secondary market yield on this paper was around 13.60 per cent.
The cut-off yield on this paper is significant with the year-end valuation of the securities around the corner.
The security was oversubscribed nearly three times. According to a primary dealer, among those who got partial allotment were the insurance companies and provident funds.
Consequently, the insurance companies and some of the public sector banks were actively buying these governrment securities.
Money market dealers do not expect the price of this security to go up beyond this level.
The 13.50 per cent 1997 was not traded because of the shut period, however according to the treasury head of a public sector bank, there were some enquires for the security in the price range of Rs 101.40