Capacious Funds May Spur Gilts By 45 Paise

Easy liquidity is likely to trigger a 40-45 paise rally in government security prices during the week. A dealer said, "There is no problem with liquidity in the system and there is a possibility of a big auction during the week as well. Hence, liquidity should remain comfortable and prices should rally."

Dealers are even expecting the 10 year yield to come down below 9 per cent during the week.

A section of the dealers, however, believe that there may be an auction of Rs 3,000-5,000 crore in the middle of the week.

"The amount of auction will be too small to have an impact on the market. The auction will be oversubscribed and prices will continue to rally even after the auction," said a dealer with a private bank.

Gilt prices went up by 10-15 paise for securities at the long end of the market. Dealers attributed the rally to the Rs 8,500 crore inflow following the redemption of the 11.75 per cent 2001 paper on Saturday and feel that the rally should continue during the week as well.

Traders do not see any major inflow as well. "However, the liquidity is comfortable enough to support a rally of 40-45 paise during the week," said a dealer with a nationalised bank.