Late Week Rally Presaged

Government security prices are likely remain range-bound in the first half of the week, though they may stage a rally in the second half.

Dealers feel prices should go up by 25-35 paise at the medium-to-long end. "Sentiment worsened after the Reserve Bank of India (RBI) deputy governor's statement on interest rates. But, it is gradually returning to normal and, by the first half of next week, prices are expected to start moving up," a dealer said.

Trading in government securities was dull on Saturday as the market was yet to recover from the aftermath of the RBI deputy governor's statement. A dealer with a private sector bank said: "Players were cautious and the trading volume was low. But, the situation is likely to improve during the week."

There will be an inflow of Rs 2,087.44 crore into the market this week. However, this will be countered by the an auction of government security.

The treasury head of a private sector bank said: "As the ways and means advances figure rose over Rs 17,000 crore, we expect an auction during the week".

Dealers, however, are expecting the auction to be oversubscribed as the banks are flooded with liquidity.