Gilt Prices May Rise By 25 Paise

Government security prices are likely to move up by 20-25 pasie at the long end on the back of easy liquidity this week. "There is no problem with the liquidity position which would push up prices further this week," a dealer said. Dealers even expect the 10-year paper yield to dip to 9.07 per cent from 9.11 per cent as on Saturday.

A section of the players believe there might be an auction or open market sale by the Reserve Bank of India (RBI) in the middle of the week. The size is expected to be between Rs 3,000 crore and Rs 5,000 crore. "The apex bank through its activity last week has made it clear that it views the gilt yields to have already reached the bottom and hence would mop up liquidity if they tend to fall too much," a dealer with a private sector bank said.

Government security prices went up by 5-10 paise at the long end of the market. Dealers said the rally was liquidity-driven and the volumes were low. They expect the rallies to be short this week as well. "The series of open market operations during the last week has hurt the sentiment in the government securities market. As there is enough liquidity to support rallies, market participants will remain cautious in taking fresh positions," the treasury head of a private sector bank said.