Gilts Seen Steady On Budget Eve

Prices of government securities are likely to remain steady during the week ahead of the Union budget for 2002-03. According to dealers, comfortable liquidity will keep sentiment in the market upbeat, but players will follow a cautious approach before taking any position. Most of the action will take place at the long end of the market.

A dealer with a private bank said: "We expect the government to take some step on the administered rate following the YV Reddy Committee's recommendation. If these interest rates are cut or made market determined, there will be further rally in gilt prices. But for that we have to wait till the month-end."

A primary dealer said : "Liquidity will remain good and we are not expecting any auction of government paper during the week . The only concern at this point of time is the budget. However, there can be a cut in repo rate even before the budget which may spur buying interest."

On Saturday, government securities were calm and prices moved up by 10-15 paise. Dealers, however, said one of the reasons for the low volume was the change over to screen-based negotiated dealing system, which the traders are slowly getting adjusted with.